ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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5 inelastic
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5 elastic
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.2 inelastic
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.2 elastic
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Detailed explanation-1: -For example, insulin is a product that is highly inelastic. For people with diabetes who need insulin, the demand is so great that price increases have very little effect on the quantity demanded.
Detailed explanation-2: -Demand for insulin is inelastic because adequate substitutes are not available. Insulin is a necessity and cannot be replaced with another medicine or simply not purchased, even if the price is high.
Detailed explanation-3: -The demand for insulin is inelastic because insulin is a necessity.
Detailed explanation-4: -If demand is inelastic, a decrease in price will cause total revenue to fall. If demand is elastic, an increase in price will cause total revenue to fall. If demand is elastic, a decrease in price will cause total revenue to rise.