Answer:
Price Elastic
Explanation:
We know that
The formula to compute the price elasticity of demand is shown below:
= (Percentage change in quantity demanded) ÷ (percentage change in price)
The classification as follows
1. Perfectly inelastic = If zero
2. Inelastic = When elasticity is below than one
3. Unitary elastic = When elasticity is equal to one
4. Elastic = When elasticity is exceeded than one
5. Perfectly elastic = When elasticity is in infinity
Since the percentage change in the quantity demanded of a good is greater than the percentage change in the price of the good which reflects that the elasticity is more than one
Answer:
The demand is price elastic in nature because it is greater than 1.
Explanation:
Price Elasticity of demand refers to the response of quantity demanded of a good to the change in price. Of course, when the price decreases, quantity demanded of a good increases and vice-versa but to how much degree is determined by the Price Elasticity of demand.
Mathematically, Price Elasticity of Demand is the ratio of % change in quantity demanded of a good and % change in the price of a good i.e.
Price Elasticity of Demand = % change in quantity demanded of a good / % change in the price of a good
In the problem, since the percentage change in the quantity demanded of a good is greater than the percentage change in the price of the good, the above ratio will be greater than 1. Hence, the demand of the good is price elastic.
