true or false with reasoning. 1) ______In general, the larger the proportion of consumer’s income spent on a product, the smaller is price elasticity of demand 2) -----if a supply curve is linear and it intersects the price axis, the curve is elastic. Support your answer mathematically. Hint: write an equation of a supply curve that intersects the price axis in the general form and go from there. 3) ______Restaurants might offer a free drink with a purchase an appetizer because of the relatively low elasticity of demand in their industry.
true or false with reasoning.
1) ______In general, the larger the proportion of consumer’s income spent on a product, the smaller is
2) -----if a supply curve is linear and it intersects the price axis, the curve is elastic. Support your answer mathematically. Hint: write an equation of a supply curve that intersects the price axis in the general form and go from there.
3) ______Restaurants might offer a free drink with a purchase an appetizer because of the relatively low elasticity of demand in their industry.
Introduction
Elasticity of demand tells that how much price is responsive to the demand. Less elasticity means inelastic demand which makes the product necessary whereas high elasticity means elastic demand which means consumer can easily switch such type of demands. Elasticity of supply tells that how much price is responsive to the supply.
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