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Question
Choose the correct answer from given options.
The expenditure on a good would change in the opposite direction as the price changes only when demand is ______
Options
elastic
inelastic
perfectly inelastic
unitary elastic
Solution
The expenditure on a good would change in the opposite direction as the price changes only when demand is Elastic.
Explanation:
The percentage change in quantity demanded in response to a given percentage change in the commodity's own price is known as price elasticity of demand.
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Fill in the blank with appropriate alternatives given below:
Perfectly elastic demand curve is ________________.
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Demand for luxuries is elastic.
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Cross Elasticity of Demand
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Demand for necessaries is inelastic.
Give reason or explain the following statement:
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Give economic term:
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Identify the correctly matched pair from the items in Column A by matching them to the items in column B:
| Column A | Column B |
| 1. Increase or decrease in demand for a commodity does not cause any change in its price. | (a) Effect on supply, in the case of Perfectly Elastic Demand. |
| 2. Increase or decrease in demand causes a change in the price of the commodity. Equilibrium quantity remains constant. | (b) Effect on demand, in the case of Perfectly Inelastic Supply. |
| 3. Increase or decrease in demand cause a change in the price of the commodity. Equilibrium quantity remains constant. | (c) Effect on demand, in the case of Perfectly Elastic Supply. |
| 4. Increase or decrease in demand for a commodity does not cause any change in its price. | (d) Effect on supply, in the case of Perfectly Elastic Demand. |
Identify the correctly matched pair from the items in Column A by matching them to the items in Column B:
| Column A | Column B | ||
| 1 | Relatively Inelastic Demand | (a) | ed > 1 |
| 2 | Relatively Elastic Demand | (b) | ed < 1 |
| 3 | Perfectly Inelastic Demand | (c) | ed = 0 |
| 4 | Perfectly Elastic Demand | (d) | ed = 1 |
When is the demand for a good said to be elastic?
