ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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the demand curve is inelastic.
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the demand curve is elastic.
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the demand curve is complementary.
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the demand curve is unit demand.
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Detailed explanation-1: -The availability of a substitute for a product affects its elasticity. If there are no good substitutes and the product is necessary, demand won’t change when the price goes up, making it inelastic.
Detailed explanation-2: -Inelastic demand occurs when the ratio of quantity demanded to price is between zero and one unit elastic. This typically occurs when a particular good or service lacks adequate substitutes and represents a necessity. Examples of goods with inelastic demand include gasoline, necessary foods, and prescription drugs.
Detailed explanation-3: -Inelastic demand means that when the price of a good or service goes up, consumers’ buying habits stay about the same, and when the price goes down, consumers’ buying habits also remain unchanged.
Detailed explanation-4: -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. In other words, quantity changes faster than price. If the value is less than 1, demand is inelastic.
Detailed explanation-5: -Inelastic demand means that consumer demand for a product won’t change much if the price of that product rises or falls. Elastic demand means that consumer demand is significantly affected by changes in price. Rising prices result in lower demand. Lower prices lead to higher demand.