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If a product has a price elasticity of demand of 2.0, the demand is considered to be?

A - Perfectly elastic. B - Perfectly inelastic. C - Relatively elastic. D - Relatively inelastic

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Question added by محمد الباجوري , Senior ERP Consultant & ERP Project Manager , XERVON GmbH
Date Posted: 2013/06/24
Saad Bin Asghar
by Saad Bin Asghar , Accounts and Finance Manager , Eastern Biotech and Life Sciences

A- Perfectly Elastic Price Elasticity Of Demand = %change in demand / %change in price, so if the value is greater than one, demand is perfectly elastic (demand is affected to a greater degree by changes in price)

Deleted user
by Deleted user

A.
Perfectly Elastic.
Demand is affected to a greater degree by changes in price.

JAMAL MAHMOUD  HAMED AHMED    CPA
by JAMAL MAHMOUD HAMED AHMED CPA , Regional Finance Manager , United States Postal service

C - Relatively elastic Elasticity is a measure of the sensitivity of consumer reaction to a change in the price of a good or service. If price elasticity of demand is greater than 1, a certain percentage change in price will result in a greater percentage change in the quantity demanded. In this situation, demand is said to be relatively elastic.

Jay Fresnido
by Jay Fresnido , Total Rewards Analyst (Assistant Manager Level) , Al Futtaim Group

Answer (C - Relatively Elastic) is correct.
The price elasticity of demand measures the responsiveness of a change in quantity demanded to a change in the price of a product.
It equals the percentage change in quantity demanded divided by the percentage change in price.
If the demand coefficient is greater than1.0, demand is elastic.
If the coefficient is less than1.0, demand is inelastic.
If the elasticity coefficient is exactly1.0, demand has unitary elasticity.

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