The absolute value of the coefficient of the price elasticity of demand is more likely to be greater than 1 if
A) consumers have a long time to adjust to a price change.
B) the product is a necessity.
C) demand is inelastic.
D) there are few close substitutes for the product.
E) total revenue declines in response to a price reduction.

Question

Quizplus · Accepted Answer

Products with an absolute value of the price elasticity of demand greater than 1 are considered elastic, meaning consumers are more responsive to price changes. This is more likely when consumers have a long time to adjust to a price change, as they can find substitutes or alter their consumption habits.

The Absolute Value of the Coefficient of the Price Elasticity