ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The price decreases from RM2, 000 to RM1, 800. Quantity demanded per year increases from 5000 to 6000 units. Which of the following is correct?
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The price elasticity of demand is-2
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The good is inferior
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Income elasticity is + 0.5
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Income elasticity is + 2
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Explanation:
Detailed explanation-1: -Elasticities can be usefully divided into five broad categories: perfectly elastic, elastic, perfectly inelastic, inelastic, and unitary.
Detailed explanation-2: -The formula looks like this: Price Elasticity of Demand = % of change in quantity demanded / % of change in price.
Detailed explanation-3: -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.
Detailed explanation-4: -The four main types of elasticity of demand are price elasticity of demand, cross elasticity of demand, income elasticity of demand, and advertising elasticity of demand.
There is 1 question to complete.