ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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quantity demanded of that good will increase
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the revenue of the firm producing that good will increase by 6%.
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the revenue of the firm producing that good will decrease by 6%.
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the quantity demanded of that good will decrease by 6%.
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None of the above.
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Detailed explanation-1: -The price elasticity of demand measures the percentage change in demand for a good when the price is changed. A price elasticity of demand coefficient of 1.2 means that demand for the product will decrease by 20%.
Detailed explanation-2: -In case of perfectly inelastic demand the change in price will have no effect on the quantity demanded.
Detailed explanation-3: -if the price elasticity of demand for a good is 2.0 then a 10 percent increase in price results in a 20 percent decrease in the quantity demanded.
Detailed explanation-4: -Answer and Explanation: If the price elasticity of demand for a good is 0.75, the demand for the good can be described as A. elastic. A good is inelastic if the quantity demanded tends to remain relatively constant despite changes in price.