Define And Explain The Concept
Beginning of paper
Price elasticity of demand is defined as how demand changes as a result of a change in price. It can be said that if a reduction in price leads to an increase in demand then demand is relatively elastic. Elasticity
is usually negative. There is an alternative scenario where demand will increase as ....
Middle of paper
.... determinant is the proportion of income spent on the good. The higher the proportion of our income that is spent on a good, the more we will forced to cut back consumption in the event of a price rise, so the bigger the income effect and the more elastic the demand will be. This is the reason salt has a very low price elasticity of demand. We spend such a small proportion of income on salt that a relatively big percentage increase in the price of salt is borne by us without too much difficul ....
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Word count: 1339
Page count: 5 (approximately 250 words per page)
