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For example if the price of a plasma television drops by one percent and demand increases by 2.6 percent, the price elasticityof demand is 2.6 indicating that this is a highly elastic item.
On the opposite side, if the result is less than 1, then demand is categorized as inelastic. This is caused when a change in price causes a smaller percent change in quantity demanded...
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This is caused when a change in price causes a smaller percent change in quantity demanded. Inelastic demand is usually associated with necessary goods such as gas, bread, or salt. An example would be if the price of gas rose one percent and the resulting demand dropped by 0.2 percent, this would yield a -0...
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