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Question & Answer
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Demand decreases significantly
Demand remains unchanged
Demand increases significantly
Demand decreases slightly
Understanding the Answer
Let's break down why this is correct
When the elasticity is above 1, demand is elastic. Other options are incorrect because Some think demand stays the same when prices rise; A price hike does not make people want more of the good.
Key Concepts
Price Elasticity of Demand
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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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