Advertisements
Advertisements
Question
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.
Solution
If a rise in the price of a commodity reduces the total expenditure on that commodity, the elasticity of demand in this case would be greater than unity (i.e., the demand is elastic).
Elastic Demand (> 1): When the demand for a commodity is elastic, a percentage increase in price leads to a larger percentage decrease in the quantity demanded. As a result, total expenditure on the commodity decreases.
APPEARS IN
RELATED QUESTIONS
Define the form of market which has a perfectly elastic demand curve.
Degrees of price elasticity of demand is of ______ types.
A demand curve which takes the form of a vertical line parallel to the price axis illustrates elasticity which is ______.
Match the following:
| Column I | Column II |
| A. Perfectly Elastic | (i) Ed = 0 |
| B. Perfectly Inelastic | (ii) Ed = infinity |
| C. Highly Elastic | (iii) Ed < I |
| D. Less Elastic | (iv) Ed > I |
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 increases 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 a commodity increases total expenditure.
For each of the following, state whether it has inelastic demand or elastic demand:
- Luxury cars
- Life saving drugs
- Salt
- English textbook of class X
When is the demand of a commodity said to be inelastic?
Indicate the degree of elasticity of demand of the following demand curve.
