If the price elasticity of demand is computed for two products and product A measures 0.79 and product B measures 1.6,then:
A) product A is more price elastic than product B.
B) the cross price elasticity of product B is less than that of the product A.
C) consumers are more sensitive to price changes in product B than in product A.
D) product B is more price inelastic than product A.
E) products A and B must be substitutes.

Question

Quizplus · Accepted Answer

Consumers are more sensitive to price changes in product B than in product A because product B has a price elasticity of demand greater than 1, indicating it is elastic, while product A's elasticity is less than 1, indicating it is inelastic.

If the Price Elasticity of Demand Is Computed for Two