Question

Identify and explain the following concept:

A rise in price by 20% of a commodity ‘X’ leads to a fall in the demand of the same commodity ‘X’ by 20%.

Answer 1

Identified concept: Unitary Elastic Demand

Explanation of concept: When a proportionate change in the price of a commodity causes an exactly equal proportionate change in the quantity demanded, the demand is said to be unitary elastic.