A good with an absolute value of the price elasticity of demand of 0.5 has:
A) an elastic demand.
B) an inelastic demand.
C) unit elastic demand.
D) perfectly inelastic demand.

Question

Quizplus · Accepted Answer

A price elasticity of demand with an absolute value less than 1 (i.e., between 0 and 1) is considered inelastic. So, a price elasticity of demand of 0.5 is inelastic, meaning that a change in price will result in a relatively smaller change in quantity demanded.

A Good with an Absolute Value of the Price Elasticity