Elasticity

Economics • Intermediate Level

10 flashcards

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Question

What does it mean when we say demand is elastic?

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Answer

Definition

Demand is elastic when a small change in price leads to a significant change in the quantity demanded. This indicates that consumers are sensitive to price changes.

Example

For instance, if the price of a popular brand of sneakers drops by 10%, and the quantity demanded increases by 30%, the demand is elastic.

Quick Tip

Elastic = sensitive to price changes.

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