Question

a) Explain what is meant elastic demand. Use diagrams and appropriate diagrams
and examples

Answer 1

By elastic demand we mean the percent change in quantity demanded is more than the percent change in price.

Elasticity of demand is measured using the following formula

$\large E =\frac{\% \triangle Q}{\% \triangle P}$

The elastic demand will be one in which the elasticity would be greater than 1. This is possible when numerator is greater than the denominator.

% ∆ Q > % ∆ P

Refer the attached image this is just for your reference.

Price Elastic demand 80 65 Demand 50 110 Quantity

Example of elastic good Cars, Mobile phones, furniture etc.

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