Question

Unit, elastic and inelastic demand have the coefficients respectively of

A. <1, >1, 1
B. 1, <1, >1
C. 1, >1, <1
D. >1, 1, <1
E. >1, <1, 1

Answer 1

The coefficients of unit, elastic, and inelastic demand indicate how demand responds to price changes, with 1 for unit elasticity, >1 for elastic demand, and <1 for inelastic demand, making the correct answer C. 1, >1, <1.

Step-by-step explanation:

The coefficients of unit, elastic and inelastic demand respectively refer to how the quantity demanded of a good responds to a change in price. When looking at the options provided:

• A coefficient of 1 indicates unitary elasticity, where the percentage change in quantity demanded is exactly equal to the percentage change in price.
• A coefficient greater than 1 (>) signifies elastic demand, where the quantity demanded is highly responsive to changes in price.
• A coefficient less than 1 (<) signifies inelastic demand, where the quantity demanded is not highly responsive to price changes.

Based on these definitions, the correct answer is C. 1, >1, <1.