The price of a good rises from N5 to N8 and the quantity demanded falls from 200 to 190 units Over this price range, the demand curve is

Answer Details

The demand curve for the good in question is fairly inelastic. In economics, elasticity refers to the responsiveness of the quantity demanded or supplied of a good or service to changes in its price. When demand is elastic, a small change in price leads to a proportionally larger change in quantity demanded, whereas when demand is inelastic, a change in price leads to a proportionally smaller change in quantity demanded. In this case, the price of the good has increased by N3 (from N5 to N8) and as a result, the quantity demanded has fallen from 200 to 190 units. This represents a decrease of only 5% in quantity demanded in response to a 60% increase in price. Therefore, the demand for this good is considered fairly inelastic, meaning that changes in price have a relatively small effect on the quantity demanded. In other words, consumers are not very sensitive to changes in price for this particular good. In summary, the demand curve for the good in question is fairly inelastic, indicating that changes in price have a relatively small effect on the quantity demanded.