ECONOMICS
DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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3%
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6%
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20%.
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50%
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Detailed explanation-1: -3. If own-price elasticity of demand equals 0.3 in absolute value, then what percentage change in price will result in a 6% decrease in quantity demanded? c) 20%.
Detailed explanation-2: -Inelastic demand occurs when changes in price cause a disproportionately small change in quantity demanded. For example, a good with inelastic demand might see its price increase by 30%, but demand falls by only 10% as a result.
Detailed explanation-3: -If a good’s price elasticity is 0 (no amount of price change produces a change in demand), it is perfectly inelastic. If price elasticity is exactly 1 (price change leads to an equal percentage change in demand), it is known as unitary elasticity.
Detailed explanation-4: -The price elasticity of demand is the percentage change in the quantity demanded of a good or service divided by the percentage change in the price. The price elasticity of supply is the percentage change in quantity supplied divided by the percentage change in price.
Detailed explanation-5: -If a 2% price rise results in a 4% decrease in quantity demanded, then (c) demand is elastic, and its total revenue decreases. When a product experiences a drastic change in the demand with a minimal price change, the demand for the product is said to be elastic.