If a good has a price elasticity of demand coefficient less than one, then:
A) this good has an elastic demand.
B) this good has an inelastic demand.
C) a 10 percent increase in the price will result in a greater than 10 percent decrease in the quantity demanded.
D) the demand curve will be vertical.

Question

Quizplus · Accepted Answer

If the price elasticity of demand coefficient is less than one, it means that a change in price will result in a proportionately smaller change in the quantity demanded. This indicates that the demand for the good is relatively insensitive to changes in price, and therefore, the good has an inelastic demand.

If a Good Has a Price Elasticity of Demand Coefficient