ECONOMICS (CBSE/UGC NET)

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ECONOMICS

ELASTICITY OF DEMAND

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
Yuna said, ‘I go ice skating five times a week. If the ticket price doubles, I will go only four times a week.’Yuna’s demand for ice skating is
A
perfectly inelastic.
B
inelastic.
C
unitarily elastic.
D
elastic.
Explanation: 

Detailed explanation-1: -If a 2% price rise results in a 4% decrease in quantity demanded, then (c) demand is elastic, and its total revenue decreases. When a product experiences a drastic change in the demand with a minimal price change, the demand for the product is said to be elastic.

Detailed explanation-2: -In case of perfectly inelastic demand the change in price will have no effect on the quantity demanded.

Detailed explanation-3: -b. If the price falls by 5% and the quantity demanded rises by 4%, this means that the changes in the demand percentage are less than the price. So, the demand under this criterion will also be inelastic.

Detailed explanation-4: -So, if the price of a good increases by 10 percent and the quantity demanded decreases by only 5 percent, that good is said to have inelastic demand.

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