If a good has an absolute price elasticity of 4, the demand for the good is
A) unit elastic.
B) inelastic.
C) perfectly elastic.
D) elastic.

Question

Quizplus · Accepted Answer

An absolute price elasticity of 4 indicates that the demand for the good is elastic, meaning that a small change in price will cause a larger change in the quantity demanded. If the absolute price elasticity were equal to 1, the demand would be unit elastic, and if it were greater than infinity, the demand would be perfectly elastic. An absolute price elasticity of less than 1 would indicate inelastic demand.

If a Good Has an Absolute Price Elasticity of 4