Question

If the absolute value of the own price elasticity of demand is greater than 1, then demand is said to be:

A. elastic.

B. inelastic.

C. unitary elastic.

D. neither elastic, inelastic, nor unitary elastic.

Answer 1

Answer:

A. elastic.

Explanation:

Elasticity of demand measures the responsiveness of quantity demanded to changes in price.

Demand is elastic when a change in price leads to a change in quantity demanded. The coefficient of elasticity for elastic demand is usually greater than one.

Demand is inelastic when a change in price has no effect on quantity demanded.

The absolute value of the coefficient of elasticity for inelastic demand is usually less than 1.

Demand is unitary when a change in price leads to an equal proportional change in quantity demanded.

The absolute value of the coefficient of elasticity for unitary demand is usually equal to one .

I hope my answer helps you.