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Question
State whether the following statements are true or false.
When a change in demand is greater than the change in price, it is a case of inelastic demand.
State whether the following statements are true or false.
When a change in demand is greater than the change in price, it is a case of inelastic demand.
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Solution
The correct option is A True
The elasticity of demand is defined as the responsiveness or sensitiveness to a given change in price or non-price determinant of a commodity. More precisely, it gives the percentage change in quantity demanded in response to a one percent change in price. When consumers buy about the same amount of commodity whether the price rises or drops, then the demand is called inelastic demand. Then the change in demand is greater than the change in price. For example, demand for petrol for a cab driver is inelastic.
The elasticity of demand is defined as the responsiveness or sensitiveness to a given change in price or non-price determinant of a commodity. More precisely, it gives the percentage change in quantity demanded in response to a one percent change in price. When consumers buy about the same amount of commodity whether the price rises or drops, then the demand is called inelastic demand. Then the change in demand is greater than the change in price. For example, demand for petrol for a cab driver is inelastic.
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