BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -If the quantity demanded of a product changes greatly in response to changes in its price, it is elastic. That is, the demand point for the product is stretched far from its prior point. If the quantity purchased shows a small change after a change in its price, it is inelastic.

Detailed explanation-2: -If the price of an elastic good increases, there is a corresponding quantity effect, where fewer units are sold, and therefore reducing revenue. The lower the price elasticity of demand, the less responsive the quantity demanded is given a change in price.

Detailed explanation-3: -If demand is elastic, then a price increase reduces the total revenue. When the price increases, then the demand falls by a considerable percentage. Then, total revenue starts moving in contradictory directions. Therefore, total income declines when the price of any commodity rises.

Detailed explanation-4: -If consumers are relatively responsive to price changes, demand is said to be elastic. 2. If consumers are relatively unresponsive to price changes, demand is said to be inelastic.

Detailed explanation-5: -Elastic Demand These are items that are purchased infrequently, like a washing machine or an automobile, and can be postponed if price rises. For example, automobile rebates have been very successful in increasing automobile sales by reducing price.