If the price elasticity of demand for a product measures .45,
A) this good has many available substitutes.
B) this good must be a nonessential good.
C) this good is a high-priced good.
D) a decrease in price will increase total revenue.
E) this good is demand price inelastic.

Question

Quizplus · Accepted Answer

A price elasticity of demand of .45 means that the demand for this product is price inelastic, meaning that a change in price will not have a significant impact on the quantity demanded. Therefore, a decrease in price will not necessarily lead to an increase in total revenue.

If the Price Elasticity of Demand for a Product Measures