Which of the following is true of price elasticity?
A)When the price elasticity equals 0,we have unitary elasticity where the percentage change in volume is equal to the percentage change in price.
B)Price elasticity is almost always a negative number due to the inverse relationship between price and volume.
C)Prestige products that can see an increase in demand when their prices are increased have negative price elasticity.
D)Price elasticities between -1 and -10 are inelastic because the percentage change in volume is greater than the percentage change in price.
E)Price elasticities between zero and -1 are considered elastic,as the percentage change in volume is less than the percentage change in price.

Question

Quizplus · Accepted Answer

Price elasticity is the measure of the responsiveness of demand for a good or service to a change in its price. It is almost always a negative number since there is an inverse relationship between price and the quantity demanded. Option A is incorrect because unitary elasticity occurs when the price elasticity equals -1, not 0. Option C is incorrect because prestige products generally have a positive price elasticity of demand, meaning demand decreases as price increases. Option D is incorrect because price elasticities between -1 and -10 are considered relatively elastic since the percentage change in volume is greater than the percentage change in price. Option E is incorrect because elasticities between zero and -1 are considered relatively inelastic since the percentage change in volume is less than the percentage change in price.

Which of the Following Is True of Price Elasticity