Discussion
In which of the following situation is the elasticity less than unity?
Answer: C
Elasticity of demand is below one (inelastic demand) when the percentage change in quantity is smaller than the percentage change in price. Then total outlay moves in the same direction as price: when price rises the outlay on the good rises, and when price falls the outlay falls. So an outlay that increases with an increase in price signals elasticity below unity. Outlay that rises when the price falls, or falls when the price rises, signals elastic demand, and an unchanged outlay when the price falls signals unit elasticity. The answer is option C.
No comment is present. Be the first to comment.
Loading…
Post your comment
Please log in or register to post a comment.
Examination Categories
- SSC Exams
- Banking Exams
- Teaching Exams
- Civil Services Exams
- Railways Exams
- Engineering Recruitment Exams
- Defence Exams
- State Government Exams
- Police Exams
- Insurance Exams
- Nursing Exams
- Other Government Exams
- NRA CET
- PG Entrance Exams
- Campus Placement
- MBA Entrance Exams
- CUET and UG Entrance
- Judiciary Exams
- Regulatory Body Exams
- Software Development