The larger the coefficient of price elasticity of demand for a product, the
A)larger the resulting price change for an increase in supply.
B)more rapid the rate at which the marginal utility of that product diminishes.
C)less competitive will be the industry supplying that product.
D)smaller the resulting price change for an increase in supply.

Question

Quizplus · Accepted Answer

The larger the coefficient of price elasticity of demand, the more sensitive consumers are to price changes. Therefore, for an increase in supply, the price change needed to sell the additional quantity is smaller, as consumers are more responsive to price changes.

The Larger the Coefficient of Price Elasticity of Demand for a Product