The price of good X increases from $55 to $60, and quantity demanded decreases from 500 to 400. The price of good Y increases from $55 to $60, and quantity demanded decreases from 500 to 475. Given this information, the:
A) consumers who buy good X are less sensitive to price changes than consumers who buy good Y.
B) demand curve for good X is less elastic than the demand curve for good Y.
C) demand curve for good X is more elastic than the demand curve for good Y.
D) demand curves for good X and good Y violate the law of demand.

Question

Quizplus · Accepted Answer

The demand for good X is more elastic than for good Y because the percentage change in quantity demanded for good X is greater than for good Y when the price increases by the same amount.

The Price of Good X Increases from $55 to $60