The smaller the price elasticity of demand,the
A)more likely the product is a luxury.
B)smaller the responsiveness of quantity demanded to a change in price.
C)more substitutes the product has.
D)greater the responsiveness of quantity demanded to a change in price.

Question

Quizplus · Accepted Answer

Price elasticity of demand measures the responsiveness of quantity demanded to a change in price. A smaller price elasticity of demand indicates a smaller responsiveness to a change in price, meaning that the quantity demanded is less likely to change significantly in response to changes in price. Therefore, Option B is the correct choice. Option A is incorrect because luxury goods tend to have a higher price elasticity of demand. Option C is incorrect because having more substitutes would increase the price elasticity of demand. Option D is incorrect because it contradicts the definition of price elasticity of demand.

The Smaller the Price Elasticity of Demand,the