If the price elasticity of demand for apples is higher than the price elasticity of demand for oranges, then a given percentage increase in the price of apples and oranges will result in more percentage decrease in the quantity demanded for apples than for oranges.

Question

Quizplus · Accepted Answer

This statement is true as it implies that the demand for apples is more sensitive to price changes than the demand for oranges. Higher price elasticity of demand means that a small change in price will result in a proportionately larger change in the quantity demanded. Therefore, a given percentage increase in the price of apples and oranges will result in a larger percentage decrease in the quantity demanded for apples than for oranges.

If the Price Elasticity of Demand for Apples Is Higher