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Question & Answer
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Demand is elastic
Demand is inelastic
Demand is unitary elastic
Demand is perfectly inelastic
Understanding the Answer
Let's break down why this is correct
The elasticity is the ratio of the percent change in quantity to the percent change in price. Other options are incorrect because Some think a smaller quantity change means inelastic demand; Unitary elasticity means the percent changes are equal.
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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