In which of the following situations is the absolute price elasticity of demand for an item most likely to exceed a value of 1?
A) when there are very few close substitutes for the item
B) when there are very few producers of the item
C) when the item's share of expenses in consumers' budgets is very small
D) when there is considerable time to adjust to a change in the price of the item

Question

Quizplus · Accepted Answer

The absolute price elasticity of demand is most likely to exceed 1 (indicating elastic demand) when consumers have considerable time to adjust to a change in the price of the item. This allows them to find substitutes or alter consumption habits more easily compared to situations where adjustments must be made quickly.

In Which of the Following Situations Is the Absolute Price