Which of the following statements about the price elasticity of demand is correct?
A)The elasticity of demand for a good in general is equal to the elasticity of demand for a specific brand of the good.
B)The absolute value of the elasticity of demand ranges from zero to one.
C)Demand is more elastic in the long run than it is in the short run.
D)Demand is more elastic the smaller the percentage of the consumer's budget the item takes up.

Question

Quizplus · Accepted Answer

In the long run, consumers have more time to adjust their behavior and find substitute products, making demand more elastic.

Answer: D 
 When a good takes up a small percentage of a consumer's budget, they are more likely to switch to a substitute product if the price increases, making demand more elastic.

A is incorrect because elasticity can vary by brand or type of good. 
B is incorrect because elasticity can be greater than one (elastic demand) or less than one (inelastic demand).

Which of the Following Statements About the Price Elasticity of Demand