Demand Elasticity | MCQs

Explanation

• If the elasticity of demand for a product is -0.5, this means that demand is inelastic.
• Inelastic demand indicates that a percentage change in price leads to a smaller percentage change in quantity demanded.
• Specifically, a demand elasticity coefficient between 0 and -1 signifies inelastic demand.

Explanation

Given own price elasticity equal to -2.5 implies that if the price of the good increases by Rs. 10, then the quantity demanded of the good Will decrease by 25% of initial quantity.