Answer to Question #91817 in Microeconomics for swatt

Question

If the price of a service in a population is $30 and in next year price of the same service increases to $90 but all other factors remain same.what will be the demand care for service will be: more elastic, less elastic or no change.

Answer 1

The law of demand states that, other things remaining the same, the higher the price of a good, the smaller is the quantity of the good demanded. If a price of a service increases form $30 to $90 the demand for that service will decrease therefore the demand care of the service will be more elastic. Similarly, at high prices and low quantities, price elasticity of demand (PED) is more elastic.