LONG QUESTIONS ON ELASTICITY OF DEMAND

Q1 What are the main degrees of Price Elasticity of Demand?

Degrees of Price Elasticity of demand

1.Perfectly Elastic Demand (E=Infinite)

2.Perfectly Inelastic Demand (E=0)

3.More Elastic Demand(E>1)

4.Less Elastic Demand (E<1)

5.Unitary Elastic Demand(E=1)

These are to be explained with the help of diagram.

Q2 What are the main factors affecting price elasticity of demand?

.Factors Affecting Elasticity of Demand

(i)Nature of commodity

(ii)Availability of substitutes

(iii) Diversity of uses

(iv)Postponement of uses

(v)Income level of the buyers

(vi)Habit of consumers

(vii)Proportion of income spent on a commodity

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(ix) Time period.

Q3 .Price Elasticity of Demand of a good is (-) 3. If the price rises from ? 10 per
unit to X12 per unit, what is the percentage change in demand? (All India 2008)