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Elasticity of Demand - Essay Example

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It can be defined as a measure used to show either the responsiveness, or elasticityof the quantity of a good or service demanded till there is a change in its price (Marshall, 1890)…
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Elasticity of Demand
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Elasticity of Demand

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The demand for a good is said to be inelastic if the PED is less than one (< 1): which means that the changes in price in such instances have a relatively small effect on the quantity demanded. On the other hand, demand for a good is said to be elastic if the PED is greater than one (> 1): this means that the changes in price have a relatively large effect on the quantity demanded (Riley, 2012). It is noteworthy that price elasticities are in most cases negative, and only those goods which do not conform to the laws of demand, for instance Veblen and Giffen goods, register a positive PED (Colander, ...Download file to see next pagesRead More
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