If the numerical value of the price elasticity of demand is 3,then a one-percent change in price will cause a(n)
A)larger percentage change in quantity demanded,so demand is elastic
B)larger percentage change in quantity demanded,so demand is inelastic
C)smaller percentage change in quantity demanded,so demand is elastic
D)smaller percentage change in quantity demanded,so demand is inelastic
E)equal percentage change in quantity demand,so demand is unitary elastic

Question

Quizplus · Accepted Answer

Price elasticity of demand measures the responsiveness of quantity demanded to changes in price. If the numerical value of the price elasticity of demand is greater than 1 (which is the case here with a value of 3), it means that a one-percent change in price will cause a larger percentage change in quantity demanded. This indicates that demand is elastic, because consumers are very sensitive to changes in price and will react strongly by reducing their demand.

If the Numerical Value of the Price Elasticity of Demand