ECONOMICS
SUPPLY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The price of bread rose by 5% and the quantity demanded fell by 4%. What was the price elasticity of demand for bread? A-0.4 B-0.8 C-1.25 D-2.0
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A
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B
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C
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D
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Explanation:
Detailed explanation-1: -The price elasticity of demand for bread is-0.5.
Detailed explanation-2: -Thus, the demand for both, bread as well as food will be highly inelastic but it would not be the same. The demand for food will be more inelastic (relatively inelastic) than bread. Hence, the given statement is false.
Detailed explanation-3: -What is price elasticity of demand? Price elasticity of demand is the ratio of the percentage change in quantity demanded of a product to the percentage change in price. Economists employ it to understand how supply and demand change when a product’s price changes.
Detailed explanation-4: -If the number is equal to 1, elasticity of demand is unitary.
There is 1 question to complete.