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Question 18 of 35

Q.If the demand function is said to be elastic, then :

(a) ∣ηd∣<1|\eta_d| < 1
(b) ∣ηd∣>1|\eta_d| > 1
(c) ∣ηd∣=0|\eta_d| = 0
(d) ∣ηd∣=1|\eta_d| = 1
Puducherry TnboardTamil Nadu HSC First Year (DGE) Commerce Board 2022MCQ· 1mImportance★★★★★
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Elastic demand corresponds to ∣ηd∣>1|\eta_d|>1 (quantity responds more than proportionally to price).

The price elasticity of demand ηd\eta_d compares the proportional change in quantity demanded to the proportional change in price. Its magnitude classifies demand:

  • ∣ηd∣>1|\eta_d| > 1: elastic — quantity changes more than proportionally.
  • ∣ηd∣=1|\eta_d| = 1: unit elastic. …
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