What is Inelastic Demand
Price elasticity of demand
Price elasticity of demand (PED or Ed) is a measure used in economics to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price, ceteris paribus.
? Inelastic demand is when a
buyer’s demand for a product does not change as much as its change in price. When price increases by 20% and demand decreases by only 1%, demand is said to be inelastic.
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Answer
How can one determine whether demand is elastic or inelastic?
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Which product is an example of a good with inelastic demand?
Essential goods, such as food and medicine, sometimes have perfectly inelastic demand. Gas could be another example of perfectly inelastic demand since many consumers rely on gas-powered vehicles to commute. Example: A town has only one gas station that sells gas for $2.00 per gallon.
What is the difference between elastic and inelastic demand?
- You will buy onions irrespective of its price - Inelastic
- Planning to buy a car, when its price gets reduced - Elastic
- You will take Education loan when your kid gets admission in premier Institutes - Elastic
- You will buy shampoo, soap, food grains, LPG, Petrol and all ur necessities irrespective of their change in price - Inelastic
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What are four determinants of price elasticity of demand?
These are:
- Consumer Income: The income of the consumer also affects the elasticity of demand. ...
- Amount of Money Spent: The elasticity of demand for a product is determined by the proportion of income spent by the individual on that product. ...
- Nature of Commodity: The elasticity of demand also depends on the nature of the commodity. ...
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