If the price elasticity of demand for peaches is 1.76 and the price elasticity of demand for apples is 1.59, then consumers are
A)more sensitive to a change in the price of apples than they are to a change in the price of peaches.
B)more sensitive to a change in the price of peaches than they are to a change in the price of apples.
C)more likely to substitute strawberries for peaches than for apples.
D)more likely to substitute strawberries for apples than for peaches.
E)eating more peaches than apples.

Question

Quizplus · Accepted Answer

A higher price elasticity of demand means that consumers are more sensitive to changes in price. Therefore, since the price elasticity for peaches (1.76) is higher than that for apples (1.59), consumers are more sensitive to changes in the price of peaches than they are to changes in the price of apples. Choice C and D are not necessarily true based on the information given, and choice E cannot be determined from the information given.

If the Price Elasticity of Demand for Peaches Is 1