If the absolute price elasticity of demand for automobiles is equal to 1.25, we say
A) that demand is elastic.
B) that demand is inelastic.
C) that there is a strong responsiveness of quantity demanded to automobiles price cuts.
D) none of the above is correct.

Question

Quizplus · Accepted Answer

An absolute price elasticity of demand greater than 1 indicates that demand is elastic, meaning that changes in price will result in a proportionately larger change in quantity demanded. This means that a price cut will result in a large increase in the quantity demanded of automobiles.

If the Absolute Price Elasticity of Demand for Automobiles Is