ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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True
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False
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Either A or B
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None of the above
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Detailed explanation-1: -When PED is greater than one, demand is elastic. This can be interpreted as consumers being very sensitive to changes in price: a 1% increase in price will lead to a drop in quantity demanded of more than 1%. When PED is less than one, demand is inelastic.
Detailed explanation-2: -Demand can be classified as elastic, inelastic or unitary: Elastic demand: Occurs when a minor price change has a significant effect on demand. Inelastic demand: Occurs when a minor price change does not have a significant effect on demand. Unitary elastic demand: Occurs when price and demand change at the same rate.
Detailed explanation-3: -If price elasticity is greater than 1, the good is elastic; if less than 1, it is inelastic.
Detailed explanation-4: -Price Elasticity of Demand (PED) Income Elasticity of Demand (YED) Cross Elasticity of Demand (XED) 15-Jan-2021