Answer to Question #151150 in Economics for Shoaib

Question

Elastic demand and its graph

Answer 1

The elasticity of demand determines the sensitivity of buyers to changes in prices in terms of the volume of goods they purchase. This category reflects a change in demand as a reaction to a change in price, but on the condition that all other factors that may affect the volume of purchased goods remain unchanged. Obviously, this indicator will differ significantly for different products.

Goods can be inelastic or inelastic demand. A classic example of inelastic demand is the basic necessities of demand, food, and footwear, for which they practically do not change with price changes. An example of elastic demand is luxuries that are highly responsive to price changes. It is quite easy to determine the type of elasticity of demand for a product. The elasticity of demand is determined by the ratio of the change in quantity (in percent) to the change in prices (in percent).