Price Elasticity of Demand

Which type of goods are normal goods?

Goods for which demand increases as income increases

What happens to the demand for inferior goods as consumer income increases?

Demand decreases

In the context of demand, what do substitute goods refer to?

Goods that can be used in place of each other

What is price elasticity of demand a measure of?

How much quantity demanded changes with respect to price changes Signup and view all the answers

Complementary goods are products that:

Are used together in consumption Signup and view all the answers

Exceptions/assumptions to the law of demand include:

Giffen goods, Veblen goods, and Engel's law Signup and view all the answers

Determinants of demand refer to factors affecting:

Consumer preferences Signup and view all the answers

Law of demand states that, all else being equal, as price decreases:

Demand increases Signup and view all the answers

Price elasticity of demand has a negative value when:

Demand is perfectly elastic Signup and view all the answers

Unitary elasticity demand curve represents a situation where:

Percentage change in quantity demanded equals percentage change in price Signup and view all the answers

For which type of goods is the demand perfectly inelastic?

Necessity goods Signup and view all the answers

In which scenario does unitary elastic demand occur?

When the price of a good increases and quantity demanded increases proportionally Signup and view all the answers

What type of elasticity of demand is expected for small cars bought by middle-class people in India?

Greater than unitary elastic demand Signup and view all the answers

Which factor influences demand elasticity by considering the diversity of uses of a commodity?

Diversity of uses Signup and view all the answers

If the demand for a commodity like paper is being considered, what type of elasticity is expected based on its uses?

Perfectly inelastic demand Signup and view all the answers

Goods that can be postponed or deferred in their purchase demonstrate what type of demand elasticity?

Greater than unitary elastic demand Signup and view all the answers

'Habits of the consumer' influence the elasticity of demand for goods like:

"Cigarettes" Signup and view all the answers

'Diversity of uses' for commodities like electricity results in what type of demand elasticity?

"Greater than unitary elastic demand" Signup and view all the answers

'Postponement of use' often leads to what kind of demand elasticity for products like houses?

"Less than unitary elastic demand" Signup and view all the answers