The price elasticity of demand coefficient for a good will be lower if which of the following occurs?
A) There are many substitutes for the good.
B) A price change persists for longer.
C) The less of the budget is spent on the good.
D) The higher the price of complements.

Question

Quizplus · Accepted Answer

The price elasticity of demand measures how much the quantity demanded of a good responds to a change in the price of that good. It tends to be lower (i.e., demand is less sensitive to price changes) when consumers spend a smaller portion of their budget on the good, as the price change has a less significant impact on their overall spending. Choices A, B, and D typically lead to higher elasticity.

The Price Elasticity of Demand Coefficient for a Good Will