Class 12 Exam  >  Class 12 Videos  >  #55, NUMERICALS - PRICE ELASTICITY OF DEMAND | PART 2 | MICROECONOMICS | CLASS 12 & 11

#55, NUMERICALS - PRICE ELASTICITY OF DEMAND | PART 2 | MICROECONOMICS | CLASS 12 & 11 Video Lecture

FAQs on #55, NUMERICALS - PRICE ELASTICITY OF DEMAND - PART 2 - MICROECONOMICS - CLASS 12 & 11 Video Lecture

1. What is price elasticity of demand?
Ans. Price elasticity of demand is a measure of the responsiveness of the quantity demanded of a good or service to a change in its price. It is calculated by dividing the percentage change in quantity demanded by the percentage change in price.
2. How is price elasticity of demand calculated?
Ans. Price elasticity of demand is calculated using the formula: Price Elasticity of Demand = (Percentage Change in Quantity Demanded / Percentage Change in Price) If the result is greater than 1, demand is considered elastic. If it is less than 1, demand is considered inelastic. And if it is equal to 1, demand is considered unitary elastic.
3. What does it mean if demand is elastic?
Ans. If demand is elastic, it means that a small change in price will result in a relatively larger change in the quantity demanded. In other words, consumers are highly responsive to changes in price, and a decrease in price will lead to a significant increase in demand, while an increase in price will lead to a significant decrease in demand.
4. What does it mean if demand is inelastic?
Ans. If demand is inelastic, it means that a change in price will result in a relatively smaller change in the quantity demanded. In other words, consumers are not very responsive to changes in price, and a decrease in price will lead to a small increase in demand, while an increase in price will lead to a small decrease in demand.
5. What factors determine the price elasticity of demand?
Ans. The price elasticity of demand is influenced by several factors, including the availability of substitutes, the necessity of the good or service, the proportion of income spent on the good or service, and the time period under consideration. Goods or services with readily available substitutes, non-essential items, a small proportion of income spent on them, and a longer time period for adjustment tend to have a higher price elasticity of demand.
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