ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Perfectly elastic
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Elastic
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Perfectly inelastic
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Inelastic
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Detailed explanation-1: -The correct option is c) elastic. Here, the change in quantity demanded is 6% and the change in price is 5%. Therefore, the ratio of 6/5 gives us 1.2, which indicates that the demand for the commodity is elastic.
Detailed explanation-2: -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-3: -The correct answer choice is B. Demand is said to be price elastic when the value of price elasticity is greater than one. Here, the given percentage change in quantity demanded is 15, while the given percentage change in price is 10 implying that the price elasticity of demand is 1.5.
Detailed explanation-4: -Inelastic demand occurs when changes in price cause a disproportionately small change in quantity demanded. For example, a good with inelastic demand might see its price increase by 30%, but demand falls by only 10% as a result.