Question

Commodity A's price elasticity of demand is (-)4 and commodity B's price elasticity of demand is 4.Which one is having more elastic.

Answer 1

Given that :-

• Price elasticity of commodity A is -4 .
• Price elasticity of commodity B is 4.

☆ While considering such question remember the following points.

In case of Elastic demand.

• Meaning of elastic demand → It means that the percentage change in demand is greater than the percentage change in price of the commodity.
• Elastic demand > unity.

In case of inelastic demand.

• Meaning of inelastic demand → It means that the percentage change in demand is is less than percentage change in price of the commodity.
• Inelastic demand < unity .

Now let's consider the question .

Ed of A = -4.

-4 is lesser than unity , implying that the percentage change in demand of commodity A is greater than the percentage change in price of commodity A.

Ed of B = 4 .

4 is greater than unity implying that the percentage change in demand of commodity B is lesser compared to the percentage change in price of commodity B .

So commodity A is more elastic than commodity B.