ECONOMICS
DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The price of hot-dogs increase by 22% and the quantity demanded falls by 25% this indicates that demand for hot dogs is:
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Elastic
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Inelastic
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Unitary elastic
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Perfectly elastic
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Explanation:
Detailed explanation-1: -Answers. Demand for a good is elastic when the percentage change in quantity demanded is more than the percentage change in price. Price of hot dogs increase by 22% and demand falls by 25% hence, demand for hot dogs is elastic.
Detailed explanation-2: -Hot dogs are inferior goods because the income elasticity of demand for hot dogs is negative (-1.25).
Detailed explanation-3: -The quantity demanded of hot dogs increases, and the demand for hot dog buns increases. Because hot dogs decreased in price, the law of demand says that the quantity demanded for hot dogs will increase.
Detailed explanation-4: -The correct answer is B, demand is more elastic in the long run than it is in the short run.
There is 1 question to complete.