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Question
What is the elasticity of demand?
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Solution
- The term elasticity indicates the responsiveness of one variable to a change in the other variable. Elasticity of demand refers to the degree of responsiveness of quantity demanded to a change in its price or any other factor.
- According to Prof. Marshall, “Elasticity of demand is great or small according to the amount demanded which rises much or little for a given fall in price and quantity demanded falls much or little for a given rise in price.”
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| (2) Perfectly inelastic supply | (b) Es < 1 |
| (3) Unitary elastic supply | (c) Es = 1 |
| (4) Relatively elastic supply | (d) Es = 0 |
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| 10 | 500 |
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| `square` | 200 |
| 50 | `square` |
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