Question

Which one of the following statements is incorrect?

Options

• Higher numerical value of elasticity indicates larger effect of a price change on the quantity demanded

• Elasticity of demand can vary only between −1 and +1

• The demand curves for all commodities which have unitary elastic demand will be rectangular hyperbola

• Elasticity of demand establishes a quantitative relationship between quantity demanded of a commodity and its price, while other factors remain constant

Answer 1

Elasticity of demand can vary only between −1 and +1

Explanation:

Elasticity is not restricted to values between −1 and +1; its absolute value can range from zero to infinity. The other statements correctly describe elasticity and unitary elastic demand.