Question

1.if the price of a good falls by 10% and the percentage decrease in the total amount consumers spend on the good is 15%, then the good is inelastic. unit elastic. perfectly inelastic. elastic.

Answer 1

The price is elastic. The correct answer is option (d).

What is Price Elasticity of Demand?

The relative price of a good is a metric that quantifies how responsively the quantity requested of a commodity responds to changes in its price. The ratio of the percentage change in quantity required to the percentage change in the price is used to calculate it.

Demand is said to be price elastic whenever the price elasticity ratio surpasses one. Here, the quantity wanted is changing by a percentage of 15, while the price is changing by a percentage of 10, indicating a demand elasticity of prices of 1.5.

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