The more sensitive quantity demanded is to a change in price, the
A) smaller a change in price must be to induce a certain change in quantity demanded.
B) greater the absolute price elasticity of demand.
C) smaller the absolute price elasticity of demand.
D) closer the absolute price elasticity of demand is to zero.

Question

Quizplus · Accepted Answer

The greater the absolute price elasticity of demand, the more sensitive quantity demanded is to a change in price. Choice A is incorrect because it suggests a smaller change in price is needed, which is the opposite of what is true. Choice C is incorrect because it suggests a smaller elasticity, which is also the opposite of what is true. Choice D is incorrect because it suggests a closer elasticity to zero, which would imply inelastic demand, which is not what the prompt states.

The More Sensitive Quantity Demanded Is to a Change in Price