The value of the absolute price elasticity of demand for good X is 4. The absolute price elasticity for good Y is 1. Which good's quantity demanded is more responsive to a change in price?
A) Good X.
B) Good Y.
C) They are equally responsive.
D) Not enough information is given.

Question

Quizplus · Accepted Answer

The higher the absolute value of the price elasticity of demand, the more responsive the quantity demanded is to a change in price. Therefore, since the absolute price elasticity for good X is 4, and the absolute price elasticity for good Y is 1, good X's quantity demanded is more responsive to a change in price.

The Value of the Absolute Price Elasticity of Demand for Good