Question

What will be the elasticity of demand in the following situation?

When the proportionate change in quantity demanded is less than the proportionate change in price.

Answer 1

1. When the proportionate change in quantity demanded is less than the proportionate change in price, the Price Elasticity of Demand (PED) is less than 1, indicating inelastic demand.
2. This is because the percentage change in quantity demanded is smaller than the percentage change in price, showing that consumers are not very responsive to price changes.