Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Elastic
B
Inelastic
C
Unit elastic
D
Perfectly inelastic
Understanding the Answer
Let's break down why this is correct
Answer
When the price of a product goes up by 10% and people buy 15% less of it, we can say that the demand for this product is elastic. This means that consumers are sensitive to price changes; when the price rises, they reduce their quantity demanded significantly. For example, if a coffee shop raises the price of a cup of coffee from $2 to $2. 20, and customers start buying fewer cups, it shows they are reacting to the price hike. In this case, the percentage drop in quantity demanded (15%) is greater than the percentage increase in price (10%).
Detailed Explanation
When the price goes up and people buy much less, demand is elastic. Other options are incorrect because Some might think demand is inelastic, meaning people buy the same amount despite price changes; Unit elastic means the percentage change in price equals the percentage change in quantity.
Key Concepts
Demand Elasticity
Consumer Behavior
Pricing Strategies
Topic
Understanding Demand Elasticity
Difficulty
easy level question
Cognitive Level
understand
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