For a particular good, a 10 percent increase in price causes a 15 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good? A. There are no close substitutes for this good. B. The good is a necessity. C. The market for the good is broadly defined. D. The relevant time horizon is long.
For a particular good, a 10 percent increase in price causes a 15 percent decrease in quantity
The elasticity of demand is the degree of responsiveness from the part of the consumer towards the changes in the price level in the economy. Similarly, the elasticity of supply is the degree of responsiveness from the part of the producer towards the changes in the price of the commodity in the market. When the percentage change in the quantity demanded is higher than that of price, and then it is known as elastic demand or supply. When the same is lower than price, then it is known as inelastic demand or supply. When the percentage change in quantity is similar to that of the price it is known as the unitary elastic demand or supply.
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