ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Unit elastic demand occurs when changes in price cause an equally proportional change in quantity demanded. For example, a good with inelastic unit elastic demand might see its price increase by 30%, and demand would also drop by 30%.

Detailed explanation-2: -When the price increases by 30% and the quantity demanded drops by 30%, the price elasticity of demand is: Unitary elastic.

Detailed explanation-3: -If the percent change in a good’s price is offset by an equal percent change in the quantity demanded, economists would label the demand for that good as unit elastic. So if a price of a good increases by 20 percent and the quantity demanded decreases by 20 percent, the demand for that good is considered unit elastic.

Detailed explanation-4: -The price elasticity of demand varies between different pairs of points along a linear demand curve. The lower the price and the greater the quantity demanded, the lower the absolute value of the price elasticity of demand.

Detailed explanation-5: -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.