ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Answer and Explanation: The correct answer is C, which means that supply is elastic. In this case, a 1% decrease in the price of a pound of squash results in a fall in quantity supplied that is greater than 1%. Therefore, the quantity of squash supplied is sensitive to changes in price, and the correct answer is C.

Detailed explanation-2: -a 1 percent decrease in the price leads to a decrease in the quantity demanded that is less than 1 percent. the price is very sensitive to any shift of the supply curve. a 1 percent decrease in the price leads to an increase in the quantity demanded that exceeds 1 percent.

Detailed explanation-3: -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.

Detailed explanation-4: -If a small percentage increase in the price of a good greatly reduces the quantity demanded for that good, the demand for that good is: Price elastic.

Detailed explanation-5: -If the percentage change in quantity demanded is greater than the percentage change in price, demand is said to be price elastic, or very responsive to price changes.