Asked by
Antonio Moore
on Dec 11, 2024Verified
If the price of apples decreases by 2 percent and causes apple consumption to increase by 4 percent, the price elasticity of demand is ____, indicating the demand is ____.
A) 2; elastic
B) 2; inelastic
C) 0.5; elastic
D) 0.5; inelastic
Price Elasticity
A measure of how much the quantity demanded of a good responds to a change in its price, with higher elasticity indicating greater sensitivity.
Elastic
Describes demand that is highly responsive to changes in price, where a small price change leads to a large change in quantity demanded.
Inelastic
Describes a scenario where the demand or supply of a good or service is not significantly changed when the price of that good or service changes.
- Understand the concept of price elasticity of demand and how to calculate it.
- Distinguish between elastic, inelastic, and unitary elasticity of demand.
Verified Answer
SY
Learning Objectives
- Understand the concept of price elasticity of demand and how to calculate it.
- Distinguish between elastic, inelastic, and unitary elasticity of demand.