Price elasticity of supply of a good is 0.8. Is the supply elastic or inelastic? Why?
ed = -0.2 [Note that ed = -2. Hence we need not prefix ed to (-2)] Percentage change in price = 5% ed = (percentage change in demand)/(percentage change in price) 0.2 = (percentage...
1 Answers 1 viewsSince Ep is 0.2, that is less than one or inelastic demand, then an increase in price of good will result an increase in the expenditure. Because in case of...
1 Answers 1 viewsIt is true that measure of price elasticity of demand for a normal good carrier minus sign because there is an inverse relationship between P and Q. Whereas there is...
1 Answers 1 viewsAvailability of substitutes makes it possible for the consumer to switch from one commodity to the other. Thus, if price of coffee increases, the consumers may switch over to tea,...
1 Answers 1 viewsexD = -(2); ed = -(3) The coefficient of price elasticity of demand is always negative due to the law of demand which states that there is an inverse relation...
1 Answers 1 viewsPrice (Rs.) Quantity Demanded (Units) TE (Rs.) 2 50 100 4 25 100 Given, Ed= -1. In this case, when elasticity of demand is (-)1, total expenditure will remain constant. Total Expenditure (TE) =2 x 50 = Rs.100 TE...
1 Answers 1 viewsGiven, eD = - 1 In this case, when elasticity of demand is (-) 1, total expenditure will remain constant. Given, Total expenditure = Rs.50 TE does not change When...
1 Answers 2 views(i) Number of Substitute Available for the Good: Demand for goods which have close substitutes (like tea and coffee) is relatively more elastic because, when price of such good rises,...
1 Answers 1 viewsWhen the supply of a good does not change despite a change in its price.
1 Answers 1 viewsWhen the percentage change in its price is greater than the percentage change in its supply.
1 Answers 1 views