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JAMB Economics 2012 Question 10

Question 10

Elasticity

If the price of an item increases by 8% while the quantity demanded falls from 1500 units to 1492 units, the demand is said to be

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

Answer: B (inelastic)

Explanation

% change in quantity = 8/1500 × 100 ≈ 0.53%. Elasticity ≈ 0.53/8 ≈ 0.07, which is less than 1 but not zero, so demand is inelastic.