Question

Explain with diagrams and relevant examples, three categories of price elasticity of demand.

Answer 1

Elasticity of demand is of three types: E> 1, E <1, E = 1. For E> 1 it is normal products (food, housing), with E <1 - high-elastic goods (furniture, perfumes, books - what is rarely bought), with E = 1 - low-elastic goods (main food products, travel in public transport).