Question

Suppose the price elasticity of demand for cheerios is -0.88. If so, the demand for it...

Suppose the price elasticity of demand for cheerios is -0.88. If so, the demand for it is ______. (Elastic, Inelastic or Unit-Elastic)? Assuming its price elasticity of demand changes to -0.21. Then the demand for it is _____. (Elastic, Inelastic or Unit-elastic)?

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Answer #1

The price elasticity of demand can be defined as the responsiveness the quantity demand of the goods due to change in the price of the goods.

If price elasticity of demand is less than 1, then it has inelastic demand and if the price elasticity of the demand is greater than 1, then it has elastic demand. If the price elasticity of demand is equal to 1, then it has unit elastic demand.

Therefore when the price elasticity of demand for cheerios is -0.88. If so, the demand for it is Inelastic, because Ed is less than 1. Assuming its price elasticity of demand changes to -0.21. Then the demand for it is inelastic, because Ed is less than 1​.

Hence the correct answer of the fill in the blanks will be (inelastic, inelastic.)

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