ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Elastic
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Inelastic
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Unit elastic
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None of the above
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Detailed explanation-1: -For example, basic food items such as bread tend to be price-inelastic: people adjust their demand in response to changes in price less than proportionately to the changes-1 < bread < 0. This means that if the price of bread goes up 10%, quantity demanded will fall by less than 10%.
Detailed explanation-2: -The price elasticity of demand for bread is-0.5.
Detailed explanation-3: -If elasticity is greater than 1, the curve is elastic. If it is less than 1, it is inelastic. If it equals one, it is unit elastic.
Detailed explanation-4: -A value of one means that your product is unit elastic and changes in your price reflect an equal change in supply or demand. A value of >1 means that your product is elastic and changes in your price will cause a greater than proportional change in supply or demand.
Detailed explanation-5: -If the absolute value of the price elasticity of demand is greater than 1, demand is termed price elastic. If it is equal to 1, demand is unit price elastic.