ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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fall as higher prices are charged.
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rise as higher prices are charged.
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almost always be constant.
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not be related to the length of time.
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Detailed explanation-1: -High-priced products often are highly elastic because, if prices fall, consumers are likely to buy at a lower price. Goods with many alternatives or competitors are elastic because, as the price of the good rises, consumers shift purchases to substitute items.
Detailed explanation-2: -The price elasticity of demand for a good or service will be greater in absolute value if many close substitutes are available for it. If there are lots of substitutes for a particular good or service, then it is easy for consumers to switch to those substitutes when there is a price increase for that good or service.
Detailed explanation-3: -The more discretionary a purchase is, the more its quantity of demand will fall in response to price increases. That is, the product demand has greater elasticity.
Detailed explanation-4: -An elastic demand or elastic supply is one in which the elasticity is greater than one, indicating a high responsiveness to changes in price. An inelastic demand or inelastic supply is one in which elasticity is less than one, indicating low responsiveness to price changes.