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16 July, 03:56

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

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  1. 16 July, 07:40
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    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.
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