A price elasticity of demand greater than 1 means that
A) the product has a unitary elastic demand.
B) the product has an elastic demand.
C) total revenue (or total consumer expenditures) will rise if price rises.
D) the product has an inelastic demand.
E) the percentage change in quantity demanded is less than the percentage change in price.

Question

Quizplus · Accepted Answer

A price elasticity of demand greater than 1 means that the percentage change in quantity demanded is greater than the percentage change in price, indicating that the product has an elastic demand. In other words, a small change in price will lead to a proportionately larger change in quantity demanded. This also means that total revenue (or total consumer expenditures) will decrease if price rises, as consumers are very responsive to changes in price and will likely switch to substitutes.

A Price Elasticity of Demand Greater Than 1 Means That