BUSINESS ADMINISTRATION
BUSINESS ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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1.necessity
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2.luxuary
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3.Has little importance in total budget
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4.none of the above
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Detailed explanation-1: -Answer: The commodity is a necessity if the elasticity of demand is low. Explanation: When the elasticity of demand is very low, the commodity is a necessity since that commodity has a little importance to the total budget.
Detailed explanation-2: -A demand curve for a product with low elasticity appears to be steeper, because the quantity demanded doesn’t change much, even if prices do. Products with low price elasticity are described as being inelastic.
Detailed explanation-3: -If the value is less than 1, demand is inelastic. In other words, quantity changes slower than price. If the number is equal to 1, elasticity of demand is unitary. In other words, quantity changes at the same rate as price.
Detailed explanation-4: -What does low price elasticity of demand for a commodity show? Notes: Price Elasticity is the measure of the degree of responsiveness of demand for a commodity to change in its price. That means the low price elasticity is demand doesn’t change with the price. These are the necessary goods.
Detailed explanation-5: -referred to technically as “low elasticity of supply, ” meaning that the amount of a commodity that producers supply to the market is not much affected by the price at which they are able to sell the commodity.