If the absolute value of the price elasticity of demand for a good is .75, the demand for that good is described asMultiple Choicenormal.elastic.inferior.inelastic.
Question
If the absolute value of the price elasticity of demand for a good is .75, the demand for that good is described asMultiple Choicenormal.elastic.inferior.inelastic.
Solution
To determine the correct answer, we need to understand what the absolute value of the price elasticity of demand indicates. The price elasticity of demand measures how much the quantity demanded of a good responds to a change in the price of that good.
- If the absolute value of the price elasticity of demand is greater than 1, the demand is considered elastic. This means that consumers are highly responsive to price changes.
- If the absolute value is less than 1, the demand is considered inelastic. This means that consumers are not very responsive to price changes.
- If the absolute value is equal to 1, the demand is unit elastic, meaning the percentage change in quantity demanded is equal to the percentage change in price.
Given that the absolute value of the price elasticity of demand for the good is 0.75, which is less than 1, the demand for that good is described as inelastic.
Therefore, the correct answer is: inelastic.
Similar Questions
A good with a price elasticity of demand equal to .75 is described as price-inelastic.Group startsTrue or FalseTrue, unselectedFalse, unselected
If the price elasticity of demand for a good is greater than one, then the demand for that good is: Group of answer choices 1.inelastic. 2.unit elastic. 3.elastic. 4.perfectly elastic.
When do we know if price elasticity of demand is inelastic?Group of answer choicesAll of the aboveWhen elasticity is less than 1None of the aboveWhen absolute value of elasticity is less than 1
Identify the item most likely to be a luxury good among the four mystery itemsmultiple choiceItem A: price elasticity of demand = −2.3Item B: price elasticity of demand = −1.0Item C: price elasticity of demand = −0.8Item D: price elasticity of demand = −0.2
Demand is inelastic ifMultiple Choicethe quantity demanded changes more or less proportionately with the price.the quantity demanded does not change very much even if the price changes dramatically.the demand curve is bowed inward towards the origin.the demand curve is bowed outward away from the origin.
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