ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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the passage of time affects elasticity.
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the law of demand eliminates elasticity.
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luxury goods are nut subject to elasticity.
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demand for necessities is inelastic.
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Detailed explanation-1: -Economists describe the way that consumers respond to price changes. If you buy the same amount or just a little less of a good after a large price increase, your demand is inelastic. If elasticity is exactly equal to 1, we describe demand as unitary elastic.
Detailed explanation-2: -A price increase will therefore increase total revenue while a price decrease will decrease total revenue. Finally, when the percentage change in quantity demanded is equal to the percentage change in price, demand is said to be unit elastic.
Detailed explanation-3: -If a good is perfectly inelastic in a given price range, it will be perfectly elastic at all prices. It is very important for the seller of a good to know whether the good is elastic, unit elastic, or inelastic in demand so that she will know what will happen to total revenue when she changes the price of the good.
Detailed explanation-4: -If the cost of gasoline increases sharply and continues to rise, how does this development affect the demand curve for cars? The demand curve for gas-guzzlers shifts to the left, and the demand curve for fuel-efficient cars shifts to the right.