If a good has an absolute price elasticity of 2, the demand for the good is
A) unit elastic.
B) inelastic.
C) perfectly elastic.
D) elastic.

Question

Quizplus · Accepted Answer

A good with an absolute price elasticity of 2 is considered elastic, meaning that a change in price will lead to a relatively larger change in quantity demanded. Unit elastic goods have an elasticity of 1, while goods with an elasticity greater than 1 are considered elastic. Therefore, the correct answer is D.

If a Good Has an Absolute Price Elasticity of 2