Price elasticity of demand of good is 0.75. Is the demand "elastic" or "inelastic" and why ?
Answers
Answer:
When we are talking about the demand for a product, the price and the quantity will always move in different directions. This means that 0.75 is the absolute value of the elasticity, which is actually -0.75 in your example.
Now considering a 10% price decrease:
E(d) = (%Change in Q/%Change in P)*100
Solving as the % Change in Q the result will be a 7.5% increase in the quantity demanded.
The fact that the elasticity of demand is lower than 1 shows us that the demand is inelastic, meaning that a change in price will result in a smaller change in quantity
Explanation:
Answer:
The correct answer to this question is inelastic.
Explanation:
Given - The price elasticity of demand for goods is 0.75.
To Find - The price elasticity of demand for goods is 0.75. Is the demand "elastic" or "inelastic" and why?
Because the change in demand is less than the change in price, it is inelastic.
It is wrong to assume that a price rise would result in a big increase in the quantity supplied since this is not the case when the price elasticity of supply is 0.75.
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