If an item has an absolute price elasticity of demand that is greater than 1, we say the demand for the item is
A) elastic.
B) inelastic.
C) perfectly inelastic.
D) unit elastic.

Question

Quizplus · Accepted Answer

The absolute price elasticity of demand measures the responsiveness of demand to a change in price. When the elasticity is greater than 1, it means that a small change in price leads to a larger change in the quantity demanded. This is known as elastic demand, which indicates that consumers are very sensitive to price changes and will likely decrease their demand significantly if the price increases.

If an Item Has an Absolute Price Elasticity of Demand