Case-Based Critical Thinking Questions
Case 10-1
You have been having some difficulty in your economics class this semester,so you have requested support from a tutor.One topic that is giving you trouble at the moment is the price elasticity of demand.
-A change in price is met by an equal and opposite change in demand.This is an example of what kind of elasticity,according to your tutor?
A) Unit elastic
B) Perfect elastic
C) Relative elastic
D) Absolute elastic

Question

Quizplus · Accepted Answer

A change in price being met by an equal and opposite change in demand is characteristic of unit elasticity, which means that the percentage change in quantity demanded is the same as the percentage change in price. Perfect elastic refers to a situation in which demand changes infinitely in response to any change in price, while absolute elastic refers to a situation in which demand changes by a specific amount in response to a change in price. Relative elastic is not a commonly used term in economics.