Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Inelastic demand
B
Elastic demand
C
Unit elastic demand
D
Perfectly inelastic demand
Understanding the Answer
Let's break down why this is correct
Answer
When the price of a product goes down by 10% and people want to buy 20% more of it, we say the demand for that product is elastic. This means that consumers are very responsive to price changes; they buy significantly more when the price drops. To understand this better, imagine a toy that costs $10. If the price falls to $9, and instead of buying 1 toy, people buy 1. 2 toys, it shows they really like the toy and are encouraged to buy more when it’s cheaper.
Detailed Explanation
When the price goes down, people buy much more of the product. Other options are incorrect because Some might think that demand doesn't change much; Unit elastic means demand changes exactly the same as price.
Key Concepts
Elastic demand
Topic
Elasticity of Demand
Difficulty
easy level question
Cognitive Level
understand
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