Advertisements
Advertisements
Question
Would the elasticity of demand in the following case be unity, less than unity or greater than unity?
A fall in the price of a commodity increases total expenditure.
Solution
If a fall in the price of a commodity increases total expenditure on that commodity, the elasticity of demand in this case would be greater than unity (i.e., the market is elastic).
Elastic Demand (> 1): When the demand for a commodity is elastic, a percentage decrease in price leads to a larger percentage increase in the quantity demanded. As a result, total expenditure on the commodity increases.
APPEARS IN
RELATED QUESTIONS
Assertion (A): The recent war in Israel will impact key imports to India, which include rough cut and polished diamonds.
Reasoning (R): Diamonds are luxury goods having relatively elastic demand.
Match the following and select the correct option.
| Column I | Column II | ||
| (i) | Perfectly elastic demand | A. | Ed = 0 |
| (ii) | Perfectly inelastic demand | B. | Ed = ∞ |
| (iii) | Relatively elastic demand | C. | Ed < 1 |
| (iv) | Relatively inelastic demand | D. | Ed > 1 |
Match the following:
| Column I | Column II |
| A. Goods whose close substitutes are available | (i) Perfectly elastic demand |
| B. Goods whose demand cannot be postponed | (ii) Perfectly inelastic demand |
| C. Goods whose quantity demanded does not respond to price change | (iii) Elastic demand |
| D. Goods which are perfect substitutes | (iv) Inelastic demand |
When is the demand for a commodity said to be perfectly inelastic?
Would the elasticity of demand in the following case be unity, less than unity or greater than unity?
A rise in the price of a commodity reduces the total expenditure.
Would the elasticity of demand in the following case be unity, less than unity or greater than unity?
A fall in the price of commodity, the total expenditure remains the same.
Draw a diagram showing the Elasticity of demand less than one.
Explain the different types of price elasticity of demand.
What is the price elasticity of demand for the following demand curve:
Straight line demand curve parallel to X-axis.
What is the price elasticity of demand for the following demand curve:
Rectangular hyperbola.
