ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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3.0.
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1/3
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1/2
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21
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Detailed explanation-1: -If the elasticity of supply is 0.5, then a 10% decrease in price will result in a 5% increase in quantity supplied.
Detailed explanation-2: -Price Elasticity of Demand = Percentage change in quantity / Percentage change in price. Price Elasticity of Demand =-15% ÷ 60% Price Elasticity of Demand =-1/4 or-0.25.
Detailed explanation-3: -Answer and Explanation: The correct answer choice is B. Demand is said to be price elastic when the value of price elasticity is greater than one. Here, the given percentage change in quantity demanded is 15, while the given percentage change in price is 10 implying that the price elasticity of demand is 1.5.
Detailed explanation-4: -If a 15% increase in price for a good results in a 20% decrease in quantity demanded, the price elasticity of demand is: 0.75.