Demand is said to be price elastic at a point on a demand curve if a
A)1 percent rise in price reduces the quantity demanded by more than 1 percent.
B)1 percent rise in price reduces the quantity demanded by less than 1 percent.
C)1 percent rise in price reduces the quantity demanded by more than 10 percent.
D)10 percent rise in price reduces the quantity demanded by less than 10 percent.

Question

Quizplus · Accepted Answer

Price elasticity of demand refers to the responsiveness of the quantity demanded for a good or service to a change in its price. When demand is said to be price elastic at a point on a demand curve, it means that a small change in price causes a relatively larger change in the quantity demanded. In this case, a 1 percent rise in price reduces the quantity demanded by more than 1 percent, which indicates high price elasticity of demand.

Demand Is Said to Be Price Elastic at a Point