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12 April, 14:28

If a small percentage increase in the price of a good greatly reduces the quantity demanded for theat good, the demand for that good is

a price inelastic.

b price elastic.

c unit price elastic.

d income inelastic.

e income elastic.

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Answers (1)
  1. 12 April, 14:44
    0
    Price elastic.

    Explanation:

    Price elasticity of good refers to the responsiveness of the quantity demanded with any change in the price level. When a slightly increase in the price level of a particular good results in large reduction in the quantity demanded will generally have a price elastic demand.

    Elasticity of demand:

    = Percentage change in quantity demanded : Percentage change in price

    For example:

    Percentage Increase in price = 10% and

    Percentage decrease in quantity demanded = 15%

    Elasticity of demand = 15 : 10

    = 1.5
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