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If demand is elastic, the absolute value of the price elasticity of demand is
less than one.
greater than one.
greater than the absolute value of the slope of the demand curve.
one.

Ask by Potter Fuentes. in the United States
Mar 28,2025

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Greater than one.

Solución

Price elasticity of demand measures how much the quantity demanded of a good responds to a change in price. If demand is elastic, it means that consumers are highly responsive to price changes.
  1. Less than one: This indicates inelastic demand, where quantity demanded changes less than the price change.
  2. Greater than one: This indicates elastic demand, where quantity demanded changes more than the price change.
  3. Greater than the absolute value of the slope of the demand curve: This is a comparative statement but does not directly define elasticity.
  4. One: This indicates unitary elasticity, where quantity demanded changes exactly as the price changes.
    Since we are looking for the condition when demand is elastic, the correct answer is that the absolute value of the price elasticity of demand is greater than one.

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The Deep Dive

If demand is elastic, the absolute value of the price elasticity of demand is greater than one. This means that a small change in price will lead to a larger change in quantity demanded. So, if prices go up, you’ll see a significant drop in the number of people buying, and vice versa. It’s like a seesaw—the balance shifts dramatically!
In the real world, industries like entertainment and luxury goods often experience elastic demand. When prices for concert tickets or high-end purses go up, many people decide to sit this one out or choose alternatives. So, businesses in these industries often keep a close eye on pricing strategies to maintain their customer base!

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