ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Wheat has seen a decrease in demand of 5%, while the price has increased 7%
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1.4 inelastic
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1.4 elastic
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.71 inelastic
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.71 elastic
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Explanation:
Detailed explanation-1: -The demand of wheat is inelastic because the consumer responsiveness is small when there is a decrease in the price of wheat . Wheat can also be viewed as normal good.
Detailed explanation-2: -The price elasticity of demand for wheat is 0.4.
Detailed explanation-3: -Demand for food grains is elastic.
Detailed explanation-4: -On a linear demand curve, the price elasticity of demand varies depending on the interval over which we are measuring it. For any linear demand curve, the absolute value of the price elasticity of demand will fall as we move down and to the right along the curve.
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