Suppose one market demand (D₁)has a price elasticity of .65 and a second market demand (D₂)has a price elasticity of .89.In comparing price elasticities of demand,it is proper to say that A)D₂ is elastic compared to D₁. B)D₂ is inelastic compared to D₁. C)D₂ is more inelastic than D₁. D)D₂ is more elastic than D₁. E)the elasticity of D₁ and D₂ is the same.

Question

Quizplus · Accepted Answer

A higher value of price elasticity of demand signifies that the demand for the product is more sensitive to price changes. Therefore, a demand with a price elasticity of .89 (D₂) is more responsive to price changes than a demand with a price elasticity of .65 (D₁). Thus, D₂ is more elastic than D₁. Therefore, option D is the correct answer.

Suppose One Market Demand (D1)has a Price Elasticity of

Suppose One Market Demand (D₁)has a Price Elasticity of