The price elasticity of demand for any good must be less than or equal to zero unless
A)the good is a necessity.
B)the good is a luxury.
C)the good is a Giffen good.

Question

Quizplus · Accepted Answer

The price elasticity of demand measures how much the quantity demanded of a good responds to a change in its price. Normally, as the price of a good increases, the quantity demanded decreases, leading to a negative price elasticity of demand. However, Giffen goods are an exception where an increase in price leads to an increase in the quantity demanded, resulting in a positive price elasticity of demand. This is because the income effect of a price increase for a Giffen good (which is an inferior good) outweighs the substitution effect, leading consumers to buy more of the good as its price rises.

The Price Elasticity of Demand for Any Good Must Be