If the absolute price elasticity of demand for a product is greater than 1, then
A) consumers are relatively insensitive to price changes.
B) consumers are relatively sensitive to price changes.
C) there is a positive relationship between price changes and total revenue.
D) producers are relatively insensitive to price changes.

Question

Quizplus · Accepted Answer

If the absolute price elasticity of demand for a product is greater than 1, it means that a small change in the price of the product leads to a relatively larger change in the quantity demanded. This indicates that consumers are relatively sensitive to price changes and are likely to respond by reducing their demand for the product. Therefore, the best choice is B.

If the Absolute Price Elasticity of Demand for a Product