When a small percentage change in price causes a large percentage change in the quantity demanded,we say that they have a:
A)highly elastic demand.
B)highly inelastic demand.
C)low magnitude of response.
D)high magnitude of response.

Question

Quizplus · Accepted Answer

When a small percentage change in price causes a large percentage change in the quantity demanded, it indicates that the consumers are highly responsive to price changes. This is known as elastic demand. Therefore, option A is the correct answer. Option B is incorrect because highly inelastic demand means that there is little or no change in the quantity demanded in response to a change in price. Option C is also incorrect because a low magnitude of response would indicate a low level of responsiveness to price changes, which is opposite to what is described in the question. Option D is also incorrect because high magnitude of response is not a commonly used term in economics to describe elasticity of demand.

When a Small Percentage Change in Price Causes a Large