The demand for a good is price inelastic if

JAMB Economics 2023 171 views
Source: JAMB · 2023

The demand for a good is price inelastic if

  1. The price elasticity is one
  2. The price elasticity is less than one ✓
  3. The price elasticity is greater than one
  4. The price elasticity is negative
Explanation

Price elasticity of demand measures how much quantity demanded changes when price changes. Demand is inelastic when the elasticity is less than one. A price change causes a smaller percentage change in quantity.

Examples are salt and drugs. An elasticity of one is unitary, and above one is elastic.

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