ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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inelastic demand
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elastic demand
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Either A or B
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None of the above
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Detailed explanation-1: -The availability of alternatives or substitute goods can affect demand elasticity. 1 Hence, the demand for goods or services with many substitutes is highly price elastic; a small increase in the price levels of goods causes consumers to buy its substitutes.
Detailed explanation-2: -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-3: -The cross elasticity of demand for substitute goods is always positive because the demand for one good increases when the price for the substitute good increases.
Detailed explanation-4: -"Inelastic” is an economic term referring to the static quantity of a good or service when its price changes. Inelastic demand means that when the price goes up, consumers’ buying habits stay about the same, and when the price goes down, consumers’ buying habits also remain unchanged.