If the price elasticity of demand for a good is 0.45, it is most likely that the good
A) has many close substitutes
B) is a luxury good
C) is high-priced
D) is a complementary good
E) has few close substitutes

Question

Quizplus · Accepted Answer

A price elasticity of demand less than 1 (inelastic demand) suggests that consumers are not very responsive to price changes, which is often the case for goods with few close substitutes. This is because consumers have fewer alternatives to switch to if the price of the good increases.

If the Price Elasticity of Demand for a Good Is