Question

2. Study the table given below and state whether demand is elastic or inelastic. Give
reasons for your answer.​

Answer 1

Answer:

elasticity of demand is smaller than 1 so it is considered as inelastic demand.

Hope it helps...

Answer 2

The demand is Inelastic

GIVEN:-

Original price = 5; new price = 3

Original Quantity = 25; new quantity = 18

TO FIND:- demand is elastic or inelastic

SOLUTION:-

• Inelastic - elasticity of demand < 1:- Quantity demanded changes by a smaller percentage than change in price.
• Elastic - elasticity of demand > 1:- Quantity demanded changes by a larger percentage than change in price.
• $e_{p} = (change \: in \: Q)/(change \: in \: P) × P/Q$

According to the question.

Change in price = Original price - new price = 5-3 = 2

Change in quantity= Original Quantity - new quantity =25 - 18 = 7

The elasticity of demand =

$= \frac{7}{2} \times \frac{5}{25} \\ = \frac{35}{50} \\ = 0.7$

The elasticity of demand = 0.7 which is lesser than 1, as we know that demand is inelastic when the elasticity of demand < 1.

Hence, The demand is Inelastic

#SPJ2