If the price elasticity of demand for a product measures 0.45,then:
A)this good has many available substitutes.
B)this good must be a non-essential 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 less than 1 indicates that the good is price inelastic, meaning that the change in quantity demanded in response to a change in price is proportionally smaller than the change in price. Therefore, a decrease in price would not necessarily increase total revenue. Additionally, the options of a, b, and c are not necessarily true based solely on the price elasticity of demand.

If the Price Elasticity of Demand for a Product Measures