Question

Which is inconsistent with an elastic demand curve?

A. The price-elasticity coefficient is less than 1

B. Total revenues fall when prices rise

C. Buyers are relatively sensitive to price changes

D. The relative change in quantity exceeds the relative change in price

Answer 1

A. The price-elasticity coefficient is less than 1 - This is inconsistent because price-elasticity coefficient of less than 1 means the demand is less sensitive to price changes which is the case when demand is inelastic and not elastic.

Explanation:

Elasticity measures the responsiveness of volume demanded for a given product when its fee changes. When the demand is elastic, it implies that a small change in price causes a larger alternate in quantity demanded (i.e relative exchange in quantity exceeds the relative exchange in price) . To calculate the elasticity of demand, you divide the change in extent demanded by way of the change in charge and multiply by using 100%. If the cost is much less than 1, the demand is considered inelastic, and if the fee is greater than 1, the demand is considered charge elastic. If the fee is precisely 1, the demand is regarded unitary elastic which ability a 10% trade in rate reasons a 10% exchange in demand. For a demand which is elastic, growing the price will decrease demand and hence get much less total revenue due to the fact the client is incredibly sensitive to rate change