What does it mean when demand is relatively elastic?
The demand for a good is said to be elastic (or relatively elastic) when its PED is greater than one. In this case, changes in price have a more than proportional effect on the quantity of a good demanded.
What are example of relatively in elastic demand?
Luxury goods, like TVs and designer brands, are good examples of relatively elastic demand. Example: A popular shoe brand sells its flagship pair of shoes for $100, and it sells 2,000 pairs of these shoes per month. The company decides to decrease the price of the shoes to $80, which is a 20% change.
What Does elasticity of demand of 2 mean?
A good with an elasticity of -2 has elastic demand because quantity falls twice as much as the price increase; an elasticity of -0.5 has inelastic demand because the quantity response is half the price increase.
What is relatively less elastic?
For example, if the price of a product increases by 30% and the demand for the product decreases only by 10%, then the demand would be called relatively inelastic. Marshall has termed relatively inelastic demand as elasticity being less than unity.
When the demand curve is relatively more elastic?
A flatter curve is relatively more elastic than a steeper curve. Availability of substitutes, a goods necessity, and a consumers income all affect the relative elasticity of demand.
What is relatively elastic demand with diagram?
Relatively Elastic Demand Relatively elastic demand refers to the demand when the proportionate change in the demand is greater than the proportionate change in the price of the good. The numerical value of relatively elastic demand ranges between one to infinity.
What is relatively elastic demand class 11?
Relatively elastic demand refers to the situation when proportionate change in quantity demand is greater than the proportionate change in price. Elasticity of demand is greater than one.
Which is the best example of elastic demand?
An example of products with an elastic demand is consumer durables. These are items that are purchased infrequently, like a washing machine or an automobile, and can be postponed if price rises. For example, automobile rebates have been very successful in increasing automobile sales by reducing price.
Which demand curve above is relatively more elastic?
flatter curve
A flatter curve is relatively more elastic than a steeper curve. Availability of substitutes, a goods necessity, and a consumers income all affect the relative elasticity of demand.