This is a difficult question. Take your time to match the term to its definition or description. Elastic Demand Inelastic Demand Total Revenue Increases Total Revenue DecreasesA.Ed<1B.Elastic price change and price increasesC.Ed>1D.Elastic price change and price decreases

Answered: This is a difficult question. Take your…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Question

This is a difficult question. Take your time to match the term to its definition or description.

	Elastic Demand
	Inelastic Demand
	Total Revenue Increases
	Total Revenue Decreases

A.	E_d<1
B.	Elastic price change and price increases
C.	E_d>1
D.	Elastic price change and price decreases

Expert Solution

Step 1

Price elasticity of demand refers to the change in the quantity demand due to the change in the price. This means responsiveness of quantity demanded due to the change in the price.

Demand is said to be elastic when the change in demand is higher than a change in the price. Ed>1
Demand is said to be inelastic when the change in demand is smaller than a change in the price. Ed<1
Demand is said to be unitary elastic when the change in demand is equal to thee a change in the price. Ed=1