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JAMB Economics 2003 Question 7

Question 7

Elasticity

The price of a good rises from ₦5 to ₦8 and the quantity demanded falls from 200 to 190 units. Over this price range, the demand curve is

  1. A.perfectly inelastic
  2. B.fairly inelastic
  3. C.perfectly elastic
  4. D.fairly elastic
Show the answer and explanation

Answer: B (fairly inelastic)

Explanation

Quantity falls by 10/200 = 5% while price rises by 3/5 = 60%, so elasticity = 5 ÷ 60 ≈ 0.08: less than 1 but not zero, i.e. fairly inelastic.