ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Its price falls
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It is a necessity
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It has close substitutes
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Consumers are not very responsive to changes in price
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Detailed explanation-1: -a large change in quantity demanded results in a small change in price. the price elasticity of demand is greater than 1. the quantity demanded is very responsive to changes in price.
Detailed explanation-2: -If price elasticity is greater than 1, the good is elastic; if less than 1, it is inelastic. If a good’s price elasticity is 0 (no amount of price change produces a change in demand), it is perfectly inelastic.
Detailed explanation-3: -A price elasticity supply greater than one means supply is relatively elastic, where the quantity supplied changes by a larger percentage than the price change.
Detailed explanation-4: -If the absolute value of the price elasticity of demand is greater than 1, demand is termed price elastic. If it is equal to 1, demand is unit price elastic. And if it is less than 1, demand is price inelastic.
Detailed explanation-5: -When the value of elasticity is greater than 1.0, it suggests that the demand for the good or service is more than proportionally affected by the change in its price. A value that is less than 1.0 suggests that the demand is relatively insensitive to price, or inelastic.