If the absolute value of price elasticity of demand for good is greater than one, then we must have
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JNU SSS 2011 Question 48: Demand theory and elasticity
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If the absolute value of price elasticity of demand for good X is greater than one, then we must have (A) if price increases by 1%, then the quantity demanded will decrease by less than 1% (B) if price decreases by 1%, then the quantity demanded will increase by less than 1% (C) if price of X increases, then the expenditure on the good will increase (D) None of the above
Demand theory and elasticity has come up 161 times in 7 exams since 2004.
What this question tests
This question is on Price elasticity of demand, part of Demand theory and elasticity in Microeconomics.
How responsive quantity is to price, at a point, along a linear curve, and for constant-elasticity demand.
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