Elastic demand

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Products with a price elasticity of demand greater than 1 are said to have a relatively elastic demand they are said to be price elastic.Simpler said an elastic demand is when demand 'does respond to price changes. With a price elastic demand:

  • an increase in price causes such a large fall in quantity demanded that total revenue falls;
  • a reduction in price causes such a large increase in the quantity demanded that the total revenue rises.


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