We say that a good has elastic demand whenever the absolute value of the price elasticity of demand is greater than one. A one percent change in price therefore causes
A) exactly a one percent change in the quantity demanded.
B) a change of less than one percent in the quantity demanded.
C) a greater than one percent change in quantity demanded.
D) a change that cannot be determined based on one percent.

Question

Quizplus · Accepted Answer

Elastic demand means that a small change in price leads to a relatively larger change in quantity demanded. When the absolute value of the price elasticity of demand is greater than 1, a 1% change in price will result in a greater than 1% change in quantity demanded. Therefore, the correct answer is C.

We Say That a Good Has Elastic Demand Whenever the Absolute