Question

Explain the concept of elasticity of demand while also explaining an example in your life.

Answer 1

Elasticity of demand refers to the response of quantity demand to change in price. In case of normal goods, as price increases the demand falls whereas when price falls the demand increases.

As price change the demand changes corresponding to that. For example: There is a chocolate at Rs.100 so we buy one chocolate but then the price of chocolate falls to Rs 50 then our demand would increase as the price falls. Therefore, as price changes the quantity demand changes.