ECONOMICS
DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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2
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2.5
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) 3
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4
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Detailed explanation-1: -Given P = 10 QS = 40 eS = 1 When the price of a commodity rises by 10 percent, its supply rises by 40 units. Its elasticity of supply is 1.
Detailed explanation-2: -When the price of a good falls by 10% its quantity demanded rises from 40 units to 50 units. Calculate Price Elasticity of Demand by the percentage method. (AI 2007) (Ans. = 2.51
Detailed explanation-3: -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-4: -Answers. Price of a product falls by 10% and its demand rises by 30%. The elasticity of demand is 3.