ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Demand tends to be elastic at high prices and inelastic at low prices. In the range of prices in which demand is elastic, total revenue will diminish as price decreases. If the relative change in price is greater than the relative change in the quantity demanded associated with it, demand is inelastic.

Detailed explanation-2: -Many factors determine the demand elasticity for a product, including price levels, the type of product or service, income levels, and the availability of any potential substitutes. High-priced products often are highly elastic because, if prices fall, consumers are likely to buy at a lower price.

Detailed explanation-3: -When demand is elastic, an increase in price will cause B. a decrease in total revenue. The total revenue method of determining elasticity states that demand is elastic when price and total revenue move in opposite directions. If price and total revenue move in the same direction, then demand is inelastic.

Detailed explanation-4: -An elastic demand is one in which the change in quantity demanded due to a change in price is large. An inelastic demand is one in which the change in quantity demanded due to a change in price is small. If the formula creates an absolute value greater than 1, the demand is elastic.