Suppose price of a commodity falls and its demand increases so much that elasticity is estimated to be 1.25. Suppose price increases back to its old level. The price elasticity will be –
A. the same
B. less than 1.25
C. higher than 1.25
D. less than 1.0
Answer:B
Suppose price of a commodity falls and its demand increases so much that elasticity is estimated to be 1.25. Suppose price increases back to its old level. The price elasticity will be –
A. the same B. less than 1.25 C. higher than 1.25 D. less than 1.0