If a 10% rise in price causes a 5% decrease in the quantity demanded of a commodity, the elasticity of demand is
Question 1 Report
If a 10% rise in price causes a 5% decrease in the quantity demanded of a commodity, the elasticity of demand is
Answer Details
In economics, the Total Revenue Test is a means for determining whether
demand is elastic or inelastic. If an increase in price causes an
increase in total revenue, then demand can be said to be inelastic,
since the increase in price does not have a large impact on quantity
demanded. If an increase in price causes a decrease in total revenue,
then demand can be said to be elastic, since the increase in price has a
large impact on quantity demanded.
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