If ice cream has an absolute price elasticity of demand that is greater than 1, then the demand for ice cream is
A) elastic.
B) inelastic.
C) perfectly inelastic.
D) unit elastic.

Question

Quizplus · Accepted Answer

When the absolute price elasticity of demand is greater than 1, demand is said to be elastic, meaning that a change in price will result in a larger change in quantity demanded. In the case of ice cream, if the price were to increase, consumers would likely switch to other substitutes, such as frozen yogurt or sorbet, resulting in a significant decrease in the quantity of ice cream demanded.

If Ice Cream Has an Absolute Price Elasticity of Demand