ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Increased by 7.5%
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Decreased by 3%
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Decreased by 7.5%
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Increased by 2.5%
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Detailed explanation-1: -If the price elasticity of demand for a product is 2.5, then a price cut from $2.00 to $1.80 will:-increase the quantity demanded by about 2.5 percent.
Detailed explanation-2: -So if the price elasticity of supply is 2.5, then it means that if prices changes by 1%, quantity supplied will change by 2.5% in same direction.
Detailed explanation-3: -2. Suppose that a 2% increase in price results in a 6% decrease in quantity demanded. Own-price elasticity of demand is equal to: a) 1/3.
Detailed explanation-4: -If a 2% price rise results in a 4% decrease in quantity demanded, then (c) demand is elastic, and its total revenue decreases. When a product experiences a drastic change in the demand with a minimal price change, the demand for the product is said to be elastic.