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JAMB Economics 2008 Question 10

Question 10

Elasticity

If the demand elasticity coefficient of cars is 0.5, it implies that the demand for petrol is

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

Answer: C (inelastic)

Explanation

A coefficient between 0 and 1 means quantity changes proportionately less than price, which is inelastic demand.