What situation is occurring if a 1 percent decrease in price results in more than a 1 percent increase in quantity demand?
A)Demand is cross-price elastic.
B)Demand is price inelastic.
C)Demand is price elastic.
D)Demand maintains the status quo.
E)Demand results in the income effect.

Question

Quizplus · Accepted Answer

This situation indicates that demand is price elastic, meaning that a small change in price has a significant impact on the quantity demanded. The responsiveness of demand to changes in price is greater than one, indicating that consumers are sensitive to price changes and will adjust their purchasing behavior accordingly.

What Situation Is Occurring If a 1 Percent Decrease in Price