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1 September, 10:56

It is Valentine's Day and Jason is desperately looking all over town for a dozen roses to give to Judy. Most likely, Jason's price elasticity of demand is:

a. infinitely large.

b. negative.

c. equal to one.

d. greater than one.

e. less than one.

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  1. 1 September, 11:32
    0
    e. less than one

    Explanation:

    Price elasticity of demand refers to percentage change in quantity demanded with respect to percent change in price. It is given by the following formula:

    Price elasticity of demand = ΔQ/ΔP * P/Q

    where ΔQ = change in quantity

    ΔP = change in price

    P = Base year price

    Q = Base year quantity

    In the current case, Jason will not be much bothered by a rise in price of roses owing to the occasion wherein roses are a necessity to him. Hence his demand would be inelastic.

    An inelastic demand would lie between 0 and 1. Thus, the correct option is e. less than one
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