Embedded Files
More change in the price of the goods but less change in demand for the goods.
See the graph, price of the goods increased from P1 to P2 and eventually the demand for the goods decreases from Q1 to Q2. The proportionate change in price is more than the proportionate change in demand.
For example, if the Demand for a product, increases by 5% following a 10% rise in price, then
EP = 5 / 10 = 0.5
Relatively Inelastic Demand Curve
Relatively Inelastic Demand Curve
Example: if we observe the prices of petrol and comparing its demand change with the change in its price levels (even though the price changes to great extent, there will not be much change in demand for the petrol in the present environment conditions)
Facts [+]
WASHINGTON: US motorists drove 1.2 per cent fewer miles in 2011, the lowest level measured since 2003, while concerns about the high cost of gasoline are rising, the government announced Tuesday.
According to Federal Highway Administration figures, last year US drivers drove 57.5 billion km less than they did in 2010.
Since 2008, the distance covered by US drivers, which is calculated by taking into account traffic volume on the highways, has fallen due to the economic crisis and the high price of gasoline.
Google Sites
Report abuse