ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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$5.00
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$6.80
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$13.20
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$15.00
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Detailed explanation-1: -When two goods X and Y are complements, then as the price of the complementary good Y rises, the demand for good X decreases and the demand curve for good X shifts to the left, as in Figure (a).
Detailed explanation-2: -If the price goes up, the quantity demanded goes down (but demand itself stays the same). If the price decreases, quantity demanded increases. This is the Law of Demand. On a graph, an inverse relationship is represented by a downward sloping line from left to right.
Detailed explanation-3: -The law of demand states that when the price of a product goes up, the quantity demanded will go down – and vice versa.
Detailed explanation-4: -A demand curve shift refers to fundamental changes in the balance of supply and demand that alter the quantity demanded at the same price. For example, you may be willing to buy 10 apples at $1. If the grocery store drops the price to $0.75, then that demand curve movement means you might buy 15 apples instead of 10.