If the demand curve over a certain range is "price elastic," this implies that the:
A) percentage change in the quantity demanded exceeds one.
B) percentage change in the quantity demanded exceeds the percentage change in product price.
C) percentage change in price exceeds the percentage change in quantity demanded.
D) product is non-reactive.
E) product has no good substitute.

Question

Quizplus · Accepted Answer

Price elasticity of demand refers to the sensitivity of quantity demanded to changes in product price. If the demand curve is price elastic, it means that a small percentage change in price results in a larger percentage change in quantity demanded. Mathematically, this is expressed as the percentage change in quantity demanded being greater than the percentage change in price (i.e. percentage change in quantity demanded/percentage change in price > 1). Therefore, option B is the correct answer.

If the Demand Curve Over a Certain Range Is "Price