(a) What is price elasticity of demand? (b) With carefully labeled diagrams, illustrate each of...
ECONOMICS
WAEC 2003
(a) What is price elasticity of demand?
(b) With carefully labeled diagrams, illustrate each of the following:
(i) perfectly inelastic demand
(ii) unitary elastic demand
(iii) fairly elastic demand
(iv) perfectly elastic demand.
Explanation
(a) Price elasticity of demand is the degree of responsiveness of quantity demanded to a small change in the price of the commodity. It is the ratio of the percentage change in quantity demanded to the percentage change in price.
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