ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The Price elasticity of soda is-0.8, therefore we can say that soda is ____
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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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Explanation:
Detailed explanation-1: -The price elasticity of-0.8 implies that the demand is inelastic.
Detailed explanation-2: -In this question, the price elasticity is 0.8. This implies that for every one percent increase in price, the quantity demanded will decline by 0.8%.
Detailed explanation-3: -The value of 1.6 tells us that this particular product’s price is elastic.
Detailed explanation-4: -Elastic (when elasticity of demand is less than-1; for example, -2 or even just-1.1 ): In this case, an increase in price by 1% leads to more than 1% drop in volume. It often means you should “price low”.
There is 1 question to complete.