Does the fact that the price elasticity of demand for a good is inelastic violate the law of demand?
What will be an ideal response?
No, if the demand is inelastic, when the price falls, the quantity demanded increases, but by a smaller percentage than the percentage fall in price. Thus the negative relationship between the price and the quantity demanded remains, and the demand curve still slopes downward, which is the law of demand.
You might also like to view...
An increase in the nominal exchange rate, e, defined as the number of units of the foreign currency that one unit of the domestic currency will buy, indicates that the domestic currency has ________ relative to the foreign currency.
A. depreciated B. become undervalued C. appreciated D. become overvalued
Specialization in production
a. raises productivity. b. requires money. c. stimulates exchange. d. All of the above are correct.
A favorable supply shock will shift short-run aggregate supply
a. left, making output rise. b. left, making output fall. c. right, making output rise. d. right, making output fall.
The demand curve faced by the monopolist
A. slopes upward. B. is perfectly elastic. C. is perfectly inelastic. D. slopes downward.