The
Explanation of Solution
Prices of most goods do not remain constant. They are constantly fluctuating and with this change in price, the demand responds. Price elasticity of demand measures the degree of a change in quantity demanded when there is a fluctuation of price.
Not all commodities show the same price elasticity. If a commodity shows a large response to a change in its price, we call it to be elastic. If a commodity shows a slight or no change as response to change in its price, we call it inelastic.
In short, price elasticity of demand is defined as the change in demand in response to a change in price.
Concept Introduction:
Price Elasticity -Elasticity of price refers to degree to which the quantity demanded changes when there is a change in price of that commodity.
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Chapter 4 Solutions
Principles of Economics (Second Edition)
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