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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Information not given.
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None of the above
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Detailed explanation-1: -With a downward-sloping demand curve, price and quantity demanded move in opposite directions, so the price elasticity of demand is always negative. A positive percentage change in price implies a negative percentage change in quantity demanded, and vice versa.
Detailed explanation-2: -The price elasticity of demand is a negative number.
Detailed explanation-3: -Slope and Demand Elasticity The more elastic, the more horizontal or “flat” the downward slope of the curve. On the other hand, if a 5 percent change in price produces only a 0.1 percent change in demand, the demand is highly inelastic.
Detailed explanation-4: -According to this principle, the marginal utility of a commodity reduces when the quantity of goods is more. Consequently, when the quantity is more, the prices will fall and demand will increase. Hence, consumers will demand more goods when prices are less. This is why the demand curve slopes downwards.