When percentage change in demand of a commodity is less than the percentage change in its price demand of a commodity is said to be?

Q. When the percentage change in demand of a commodity is less than the percentage change in its price, then the demand is called?
Answer: [B] Inelastic
Notes: When the percentage change in quantity demanded is less than the percentage change in price, the demand for the good is said to be inelastic.

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The elasticity of demand refers to the degree to which demand responds to a change in an economic factor.

Price is the most common economic factor used when determining elasticity. Other factors include income level and substitute availability.

Elasticitymeasures how demand shifts when economic factors change. When demand remains constant regardless of price changes, it is called inelasticity.

• The elasticity of demand refers to the change in demand when there is a change in another economic factor, such as price or income.
• Demand is considered inelastic if demand for a good or service remains unchanged even when the price changes,
• Elastic goods include luxury items and certain food and beverages as changes in their prices affect demand.
• Inelastic goods may include items such as tobacco and prescription drugs as demand often remains constant despite price changes.

The elasticity of demand, or demand elasticity, measures how demand responds to a change in price or income. It is commonly referred to as price elasticity of demand because the price of a good or service is the most common economic factor used to measure it.

An elastic good is defined as one where a change in price leads to a significant shift in demand and where substitutes are available for an item, the more elastic the good will be.

The price elasticity of demand is calculated by dividing the percentage change in quantity demanded by the percentage change in price.

If the quotient is greater than or equal to one, the demand is considered to be elastic. If the value is less than one, demand is considered inelastic.

Common examples of products with high elasticity are luxury items and consumer discretionary items, such as a brand of cereal or candy bars. Food products are easily substituted and brand names are easily replaced by lower-priced items.

A change in the price of a luxury car can cause a change in the quantity demanded, and the extent of the price change will determine whether or not the demand for the good changes and if so, by how much.

Other factors influence the demand elasticity of goods and services such as income level and available substitutes. During a period of job loss, people may save their money rather than upgrading their smartphones or buying designer purses, leading to a significant change in the consumption of luxury goods.

Available substitutes for a good or service makes an item more sensitive to price changes. If the price of Android phones increases by 10%, this could move demand from Android to iPhones.

Inelasticity of demand is evident when demand for a good or service is static when its price or other factor changes,

Inelastic products are usually necessities without acceptable substitutes. The most common goods with inelastic demand are utilities, prescription drugs, and tobacco products. Businesses offering such products maintain greater flexibility with prices because demand remains constant even if prices increase or decrease.

The most common goods with inelastic demand are utilities, prescription drugs, and tobacco products. In general, necessities and medical treatments tend to be inelastic, while luxury goods tend to be most elastic.

The cross elasticity of demand measures the responsiveness in quantity demanded of one good when the price of another changes. Cross elasticity of demand can refer to substitute goods or complementary goods. When the price of one good increases, the demand for a substitute good will increase as consumers seek a substitute for the more expensive item. Conversely, when the price of a good rises, any items closely associated with it and necessary for its consumption will also decrease.

The advertising elasticity of demand (AED) is a measure of a market's sensitivity to increases or decreases in advertising saturation. The elasticity of an advertising campaign is measured by its ability to generate new sales.

Positive advertising elasticity means that an uptick in advertising leads to an increase in demand for the goods or services advertised. A good advertising campaign will lead to a positive shift in demand for a good.

The four main types of elasticity of demand are price elasticity of demand, cross elasticity of demand, income elasticity of demand, and advertising elasticity of demand. They are based on price changes of the product, price changes of a related good, income changes, and changes in promotional expenses, respectively.

Elasticity is measured by the ratio of two percentages, measured by calculating the ratio of the change in the quantity demanded to the change in the price.

If the price elasticity is equal to 1.5, it means that the quantity of a product's demand has increased 15% in response to a 10% reduction in price (15% / 10% = 1.5). 

Elasticity occurs when demand responds to changes in price or other factors. Inelasticity of demand means that demand remains constant even with changes in economic factors.

Products and services for which consumers have many options commonly have elastic demand, while products and services for which consumers have few alternatives are most often inelastic

Price elasticity of demand is a measurement of the change in the consumption of a product in relation to a change in its price. Expressed mathematically, it is:

Price Elasticity of Demand = Percentage Change in Quantity Demanded / Percentage Change in Price

Economists use price elasticity to understand how supply and demand for a product change when its price changes.

• Price elasticity of demand is a measurement of the change in consumption of a product in relation to a change in its price.
• A good is elastic if a price change causes a substantial change in demand or supply.
• A good is inelastic if a price change does not cause demand or supply to change very much.
• The availability of a substitute for a product affects its elasticity. If there are no good substitutes and the product is necessary, demand won’t change when the price goes up, making it inelastic.

Economists have found that the prices of some goods are very inelastic. That is, a reduction in price does not increase demand much, and an increase in price does not hurt demand either. For example, gasoline has little price elasticity of demand. Drivers will continue to buy as much as they have to, as will airlines, the trucking industry, and nearly every other buyer.

Other goods are much more elastic, so price changes for these goods cause substantial changes in their demand or their supply.

Not surprisingly, this concept is of great interest to marketing professionals. It could even be said that their purpose is to create inelastic demand for the products they market. They achieve that by identifying a meaningful difference in their products from any others that are available.

If the quantity demanded of a product changes greatly in response to changes in its price, it is elastic. That is, the demand point for the product is stretched far from its prior point. If the quantity purchased shows a small change after a change in its price, it is inelastic. The quantity didn’t stretch much from its prior point. 

The more easily a shopper can substitute one product for another, the more the price will fall. For example, in a world in which people like coffee and tea equally, if the price of coffee goes up, people will have no problem switching to tea, and the demand for coffee will fall. This is because coffee and tea are considered good substitutes for each other.

The more discretionary a purchase is, the more its quantity of demand will fall in response to price increases. That is, the product demand has greater elasticity.

Say you are considering buying a new washing machine, but the current one still works; it's just old and outdated. If the price of a new washing machine goes up, you’re likely to forgo that immediate purchase and wait until prices go down or the current machine breaks down.

The less discretionary a product is, the less its quantity demanded will fall. Inelastic examples include luxury items that people buy for their brand names. Addictive products are quite inelastic, as are required add-on products, such as ink-jet printer cartridges.

One thing all of these products have in common is that they lack good substitutes. If you really want an Apple iPad, a Kindle Fire won’t do. Addicts are not dissuaded by higher prices, and only HP ink will work in HP printers (unless you disable HP cartridge protection).

The length of time that the price change lasts also matters. Demand response to price fluctuations is different for a one-day sale than for a price change that lasts for a season or a year.

Clarity of time sensitivity is vital to understanding the price elasticity of demand and for comparing it with different products. Consumers may accept a seasonal price fluctuation rather than change their habits.

As a rule of thumb, if the quantity of a product demanded or purchased changes more than the price changes, the product is considered to be elastic. (For example, the price goes up by 5%, but the demand falls by 10%.)

If the change in quantity purchased is the same as the price change (say, 10%/10% = 1), the product is said to have unit (or unitary) price elasticity.

Finally, if the quantity purchased changes less than the price (say, -5% demanded for a +10% change in price), then the product is deemed inelastic.

To calculate the elasticity of demand, consider this example: Suppose that the price of apples falls by 6% from $1.99 a bushel to $1.87 a bushel. In response, grocery shoppers increase their apple purchases by 20%. The elasticity of apples is thus: 0.20/0.06 = 3.33. The demand for apples is quite elastic.

Price elasticity of demand is the ratio of the percentage change in quantity demanded of a product to the percentage change in price. Economists employ it to understand how supply and demand change when a product’s price changes.

If a price change for a product causes a substantial change in either its supply or demand, it is considered elastic. Generally, it means that there are acceptable substitutes for the product. Examples would be cookies, luxury automobiles, and coffee.

If a price change for a product doesn’t lead to much if any change in its supply or demand, it is considered inelastic. Generally, it means that the product is considered to be a necessity or a luxury item with addictive constituents. Examples would be gasoline, milk, and iPhones.

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