Question

The value of the price elasticity of demand for good y is equal to -2.0 this...

The value of the price elasticity of demand for good y is equal to -2.0 this would imply that the price elasticity of demand for good y is:
Select one:
a. inelastic
b. unit elastic
c. the elasticity cannot be determined with the information given
d. elastic
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Answer #1

Solution:-

Price elasticity of demand for good y is equal to -2.0 this would imply that demand for good y is elastic because price elasticity of demand is greater than one.

If price elasticity of demand will be greater than one and in this case demand is said to be elastic.

If price elasticity of demand will be less than one in this case demand is said to be inelastic.

If price elasticity of demand will be equal to one in this case demand is said to be unit elastic.

Therefore option (d) is correct.

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