Learning Path
Question & Answer
Choose the Best Answer
Elastic
Inelastic
Unit elastic
Perfectly elastic
Understanding the Answer
Let's break down why this is correct
When the price rises by 10% and the quantity sold falls by 15%, the drop in quantity is larger than the price rise. Other options are incorrect because The idea that demand is not sensitive to price is a misconception; Unit elastic means the percentage change in quantity equals the percentage change in price.
Key Concepts
Price Elasticity of Demand
medium level question
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Deep Dive: Price Elasticity of Demand
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Definition
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price. It quantifies how much the quantity demanded will change in percentage terms in response to a one percent change in price. Elasticity values help determine the sensitivity of demand to price fluctuations.
Topic Definition
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price. It quantifies how much the quantity demanded will change in percentage terms in response to a one percent change in price. Elasticity values help determine the sensitivity of demand to price fluctuations.
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