If the price elasticity of demand for a luxury is 2.6, then the price elasticity of demand for a necessity is expected to be
A) greater than 2.6.
B) equal to 2.6.
C) less than 2.6.
D) perfectly elastic.

Question

Quizplus · Accepted Answer

Necessities have lower price elasticity of demand than luxuries, meaning that their demand is less sensitive to changes in price. Therefore, the price elasticity of demand for a necessity is expected to be less than 2.6.

If the Price Elasticity of Demand for a Luxury Is