If the price elasticity of demand is computed for two products, and product A measures .79, and product B measures 1.6, then:
A) product A is more price elastic than product B.
B) product B is more price elastic than product A.
C) consumers are more sensitive to price changes in product A than in product B.
D) product B is more price inelastic than product A.
E) products A and B must be substitutes.

Question

Quizplus · Accepted Answer

Product B, with an elasticity greater than 1, is more price elastic, meaning consumers are more responsive to price changes compared to product A, which has an elasticity less than 1.

If the Price Elasticity of Demand Is Computed for Two