Question

Suppose the price elasticity of demand for cereal is negative −1.03. If​ so, then the demand for cereal is (unit-elastic, elastic, inelastic. In another​ example, assume the price elasticity of demand for a particular magazine is negative −0.72. The demand for the magazine is unit-elastic, elastic, inelastic

Answer 1

Answer:

The demand for cereal is elastic.

The demand for the magazine is inelastic.

Explanation:

The price elasticity of demand is the degree of responsiveness of quantity demanded to change in price. A negative price elasticity implies that the product is a normal good.

The price elasticity of demand for cereal is −1.03. This means that the demand is price elastic. An elastic demand implies that a change in price will cause more than proportionate change in quantity demanded.

The price elasticity of demand for a particular magazine is −0.72. This means that the demand is price inelastic. An inelastic demand implies that a change in price will cause less than proportionate change in the quantity demanded.