Answer:
Gina's prices elasticity of demand for ice-cream is relatively elastic.
Explanation:
Price Elasticity of Demand (PED) is used in economics to show the change in quantity demanded of any product or service to increase/decrease only when the price changes.
PED = Change in Quantity / Change in Price.
In these case; Gina’s expenditure on ice-cream will be; (P*Q), where P=Price and Q=quantity of ice-cream.
Here, (P*Q) increases as P decreases which can only mean that Q increases at a faster rate than the rate at which P decreases. We are right to say that demand is very sensitive to price changes, or that her demand for ice cream is relatively elastic( PED >1). More generally, recall that when price and total revenue (P*Q) move in opposite directions, it is because demand is elastic over that price range.
See attached for other types of price elasticity.
