ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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True
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False
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Either A or B
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None of the above
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Detailed explanation-1: -Price elasticity of demand at exactly 1 means that the product is unit-elastic. Therefore, quantity demanded and price change at the same rate due to their proportionate relationship.
Detailed explanation-2: -If the number is equal to 1, elasticity of demand is unitary. In other words, quantity changes at the same rate as price. Elasticity of demand is illustrated in Figure 1. Note that a change in price results in a large change in quantity demanded.
Detailed explanation-3: -Any rise or fall in the price of a commodity, the quantity demanded remains the same. The elasticity of demand in this case will be equal to zero.
Detailed explanation-4: -Unit Elastic Supply: A product is said to have a unit elastic supply when the change in its quantity supplied is proportionate or equal to the change in its price. The elasticity of supply, in this case, is equal to 1.
Detailed explanation-5: -Elastic, Unit Elastic, and Inelastic Demand If it is equal to 1, demand is unit price elastic. And if it is less than 1, demand is price inelastic.