Table 5-1

$$\begin{array} { | c | c | }
\hline \text { Good } & \begin{array} { c }
\text { Price Elasticity } \
\text { of Demand }
\end{array} \
\hline \mathrm { A }& 1.9 \
\hline \mathrm { B } & 0.8 \
\hline
\end{array}$$
-Refer to Table 5-1. Which of the following is consistent with the elasticities given in Table 5-1?
A)A is a luxury and B is a necessity.
B)A is a good after an increase in income and B is that same good after a decrease in income.
C)A has fewer substitutes than B.
D)A is a good immediately after a price increase and B is that same good three years after the price increase.

Question

Table 5-1
​
​
 $$\begin{array} { | c | c | } 
\hline \text { Good } & \begin{array} { c } 
\text { Price Elasticity } \
\text { of Demand }
\end{array} \
\hline \mathrm { A }& 1.9 \
\hline \mathrm { B } & 0.8 \
\hline
\end{array}$$ ​
-Refer to Table 5-1. Which of the following is consistent with the elasticities given in Table 5-1?
A)A is a luxury and B is a necessity.
B)A is a good after an increase in income and B is that same good after a decrease in income.
C)A has fewer substitutes than B.
D)A is a good immediately after a price increase and B is that same good three years after the price increase.

Quizplus · Accepted Answer

Goods with a price elasticity of demand greater than 1, like Good A with an elasticity of 1.9, are considered elastic and often are luxuries because consumers are more sensitive to price changes. Goods with a price elasticity of demand less than 1, like Good B with an elasticity of 0.8, are considered inelastic and often are necessities because consumers are less sensitive to price changes.

Table 5-1 ​ ​ ​ -Refer to Table 5-1

Table 5-1

-Refer to Table 5-1