ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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equal to
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less than
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the same as
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More than
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Detailed explanation-1: -If the percentage change in the quantity demanded of good X is less than the percentage change in the price of good Y, the demand for good X, is cross‐price inelastic with respect to good Y, or not very responsive to changes in the price of good Y.
Detailed explanation-2: -An inelastic demand or supply curve is one where a given percentage change in price will cause a smaller percentage change in quantity demanded or supplied. Unitary elasticity means that a given percentage change in price leads to an equal percentage change in quantity demanded or supplied.
Detailed explanation-3: -Perfectly inelastic demand means that the change in quantity is zero for any percentage change in price; the demand curve in this case is vertical. Price inelastic demand means only that the percentage change in quantity is less than the percentage change in price, not that the change in quantity is zero.
Detailed explanation-4: -"Inelastic” is an economic term referring to the static quantity of a good or service when its price changes. Inelastic demand means that when the price goes up, consumers’ buying habits stay about the same, and when the price goes down, consumers’ buying habits also remain unchanged.
Detailed explanation-5: -If the demand for a product is elastic, then: The change in the quantity demanded is greater than the change in income. The percentage change in quantity demanded is greater than the percentage in price.