ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Answer and Explanation: If the price elasticity of demand for oil is 0.7, then: c. demand is inelastic, buyers are relatively insensitive to price, and the demand curve is relatively steep.

Detailed explanation-2: -What Does a Price Elasticity of 1.5 Mean? If the price elasticity is equal to 1.5, it means that the quantity of a product’s demand has increased 15% in response to a 10% reduction in price (15% / 10% = 1.5).

Detailed explanation-3: -We say that demand is elastic when quantity demanded changes a lot when the price changes; more precisely, the percentage change in quantity demanded is greater than the percentage change in price. In this case, quantity demanded is very responsive to changes in price.

Detailed explanation-4: -Price elasticity measures the responsiveness of the quantity demanded or supplied of a good to a change in its price. It is computed as the percentage change in quantity demanded-or supplied-divided by the percentage change in price.