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InterviewSolution
| 1. |
Price elasticity of demand and slope of demand curve are the two same terms. Explain. |
| Answer» No, the slope of demand and the elasticity of demand are two different concepts. Slope of demand curve is referred as change in price divided by the change in quantity demand i.e {tex}\\frac{\\;\\triangle P}{\\;\\bigtriangleup Q}\\;{/tex}Whereas elasticity measures the responsiveness of demand for a commodity to change in its price i.e.while computing the elasticity (as in the case of price elasticity of demand), the numerator has the quantity while the denominator has the price. As elasticity is measured on percentage basis, therefore the answer of the same is unit less whereas slope does contain units as the components like price and quantity are measured in units for e.g. how many rupees spent on buying 1 kg tomatoes, etc. | |