Question

" If a 1 percent increase in price results in less than a 1 percent decrease in quantity demand, demand is: "

Answer 1

Answer:

inelastic

Explanation:

when we are measuring hte price elasticity of demand (PED), we calculate it by dividing the ]% change in quantity by the % change in price.

• If the price of a product increases by 1%, and the quantity demanded changes in a smaller %, the PED is < 1, so it is inelastic.
• If the price of a product increases by 1%, and the quantity demanded changes in a larger %, the PED is > 1, so it is elastic.
• If the price of a product increases by 1%, and the quantity demanded changes in same 1%, the PED is = 1, so it is unit elastic.