What are the Role of elasticity of demand in economy?
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Explanation:
The concept of elasticity for demand is of great importance for determining prices of various factors of production. Factors of production are paid according to their elasticity of demand. In other words, if the demand of a factor is inelastic, its price will be high and if it is elastic, its price will be low
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Answer:
Role of Elasticity of Demand in economy
- Taking various business decisions.
- Important in the Formulation of Government Policies.
- Determination of Factor Prices.
- Important in the International Trade.
- Change in the Rate of Exchange, etc...
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