The price of burgers increase by 22% and the quantity of burgers demanded falls by 25% This indicates that demand for burgers is ?
Correct answer: A. elastic
- A. elastic
- B. perfectly elastic
- C. unitarily elastic
- D. inelastic.
Explanation
The absolute percentage change in quantity demanded is greater than the price change, 25% compared with 22%, so elasticity is greater than one. Therefore, demand is elastic rather than unitary or inelastic.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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