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

Question

Quizplus · Accepted Answer

The higher a good's absolute price elasticity of demand, the more responsive its quantity demanded is to a change in price. Since good A has an elasticity of 4 and good B has an elasticity of 1, it can be concluded that good A's quantity demanded is more responsive to a change in price.

The Value of the Absolute Price Elasticity of Demand for Good