ECONOMICS
DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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how circumstances effect consumers demand for a good or service
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how changing income effects demand for a good or service
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how sensitive consumers are to price changes for a good or service
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the impact complimentary goods have on demand
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the impact substitute goods have on demand
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Detailed explanation-1: -Elasticity is an economic concept used to measure the change in the aggregate quantity demanded of a good or service in relation to price movements of that good or service. A product is considered to be elastic if the quantity demand of the product changes more than proportionally when its price increases or decreases.
Detailed explanation-2: -If demand is elastic, the quantity demanded is very sensitive to price, e.g. when a 1% rise in price generates a 10% decrease in quantity. If demand is inelastic, the good’s demand is relatively insensitive to price, with quantity changing less than price.
Detailed explanation-3: -That’s where the price elasticity of demand comes in. It is a measure of how sensitive, or responsive, consumers are to a change in price. For any given good or service, the price elasticity of demand measures how much the quantity demanded by consumers responds to a change in the price of that good or service.
Detailed explanation-4: -Overall, price elasticity measures how much the supply or demand of a product changes based on a given change in price. Elastic means the product is considered sensitive to price changes. Inelastic means the product is not sensitive to price movements.
Detailed explanation-5: -Elasticity of demand is an important variation on the concept of demand. Demand can be classified as elastic, inelastic or unitary. An elastic demand is one in which the change in quantity demanded due to a change in price is large.