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#cfa #cfa-level-1 #economics #microeconomics #reading-13-demand-and-supply-analysis-introduction #study-session-4
Note that if the law of demand holds, own-price elasticity of demand will always be negative, because a rise in price will be associated with a fall in quantity demanded, but it can be either elastic or inelastic.
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4.1. Own-Price Elasticity of Demand
than one, demand is defined to be inelastic. When that magnitude is greater than one, demand is defined to be elastic . And when the elasticity coefficient is equal to negative one, demand is said to be unit elastic , or unitary elastic . <span>Note that if the law of demand holds, own-price elasticity of demand will always be negative, because a rise in price will be associated with a fall in quantity demanded, but it can be either elastic or inelastic. In our hypothetical example, suppose the price of gasoline was very high, say $15 per gallon. In this case, the elasticity coefficient would be −1.154. Therefore, because the magnitude


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