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Define And Explain The Concept

Part 1 of Paper
....n be said that if a reduction in price leads to an increase in demand then demand is relatively elastic. Elasticity is usually negative. There is an alternative scenario where demand will increase as price does so too. This happens only in the case of Giffen goods, where elasticity is positive. The formula for price el....

Part 2 of Paper
....ow price elasticity of demand. We spend such a small proportion of income on salt that a relatively big percentage increase in the price of salt is borne by us without too much difficulty, so the income effect would be pretty small. One other determinant of price elasticity of demand is the time period. When prices rise people may take time to adjust their consumption patterns and find alternatives. The longer the time after a price change, then, the more elastic is demand likely to be. Income e....

Number of words: 1339 - Approximate pages: 5

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