Understanding Price Elasticity of Demand

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Questions and Answers

What is price elasticity of demand?

It refers to how the demand for a certain product changes in regard to a price change.

When does elastic demand occur?

Elastic demand occurs when demand vary greatly in response to price fluctuations.

What happens in inelastic demand?

Inelastic demand happens when the change in demand is nothing or little when the price changes.

What makes a product elastic?

<p>Elasticity is defined as a change in the price for a product that results in significant shift in either supply or demand.</p> Signup and view all the answers

What makes a product inelastic?

<p>If a product's price change causes little, if any, change in supply or demand, it is deemed inelastic.</p> Signup and view all the answers

What is inelastic demand?

<p>Inelastic demand is when the quantity demanded for a good or service remains relatively constant even when the price changes.</p> Signup and view all the answers

Give an example of a product with inelastic demand.

<p>Electricity is an example of a product with inelastic demand.</p> Signup and view all the answers

What is elastic demand?

<p>Elastic demand is when the quantity demanded for a good or service varies significantly with price changes.</p> Signup and view all the answers

How does inelastic demand affect revenue for electricity providers?

<p>Inelastic demand results in higher revenue for electricity providers.</p> Signup and view all the answers

Explain the impact of price increases on revenue for luxury cars.

<p>Price increases can lead to revenue losses for luxury cars due to elastic demand.</p> Signup and view all the answers

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