how does the level of price of a good effect the price elasticity of demand ? explain?
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Price elasticity of demand measures the change in consumption of a good as a result of a change in price. It is calculated by dividing the percent change in consumption by the percent change in price. ... A score between 0 and 1 is considered inelastic, since variation in price has only a small impact on demand.
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The smaller the price of a good, and the less is the elasticity of its demand. For, when the price is very small, a change in price would have no considerable effect on demand.
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