ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -An elastic demand is one in which the change in quantity demanded due to a change in price is large. An inelastic demand is one in which the change in quantity demanded due to a change in price is small.

Detailed explanation-2: -If demand is elastic, the quantity demanded is very sensitive to price, e.g. when a 1% rise in price generates a 10% decrease in quantity. If demand is inelastic, the good’s demand is relatively insensitive to price, with quantity changing less than price.

Detailed explanation-3: -Price elasticity of demand is a measurement of the change in consumption of a product in relation to a change in its price. A good is perfectly elastic if the price elasticity is infinite (if demand changes substantially even with minimal price change).

Detailed explanation-4: -Typically, the concept of price elasticity of demand is used to measure price sensitivity. Price elasticity describes the responsiveness of demand changes in price levels. A product is price elastic if even minor fluctuations in price are associated with changes in demand.

Detailed explanation-5: -The price elasticity of demand is an economic indicator of the increase in the quantity of commodity demands or consumes in relation to its change in price. Economists use price elasticity to explain how supply or demand changes and understand the workings of the real economy, despite price changes.