If demand is price-elastic, then
A) The elasticity number E is greater than 1.
B) The elasticity number E is less than 1.
C) The elasticity number E is equal to 1.
D) The elasticity number E is 0.

Question

Quizplus · Accepted Answer

When demand is price-elastic, a change in price causes a relatively larger change in the quantity demanded, and the elasticity number E is greater than 1. This means that consumers are sensitive to changes in price and will reduce their demand significantly if the price increases, leading to a decrease in total revenue for the seller. Conversely, if the price decreases, consumers will increase their demand significantly, leading to an increase in total revenue for the seller.

If Demand Is Price-Elastic, Then