ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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10 000
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100 000
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160 000
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200 000
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Detailed explanation-1: -To calculate elasticity, take the percentage change in either demand or supply and divide it by the percent change in price. The resulting number is the goods elasticity value. If the number is equal to 1, then the good is unit elastic.
Detailed explanation-2: -Hence, when the price is raised, the total revenue increases, and vice versa. When the price elasticity of demand is unit (or unitary) elastic (Ed = −1), the percentage change in quantity demanded is equal to that in price, so a change in price will not affect total revenue.
Detailed explanation-3: -Given: Price of pens decreases from R20 to R19 and the Quantity demanded for pens increases from 5, 000 units to 10, 000 units. The price elasticity of demand(Ed) is 1.32, as the value of Ed is greater/more than 1 it implies that demand is elastic.
Detailed explanation-4: -b. The price elasticity of supply at $80 will be 0.5 and at $100 will be 0.555.