Question

Assume the price elasticity of demand for a good is –1.23. The demand for this good is _______ which means the percentage change in quantity demanded (in absolute value) is _______ the percentage change in price (in absolute value).

Group of answer choices

elastic, larger than

elastic, smaller than

inelastic, smaller than

inelastic, larger than

Answer 1

From the given return the question the value of price elasticity of demand is -1.23

Here negative sign shows the inverse relationship between price and quantity demanded

The value shows that the demand is elastic in nature

An elastic demand is that type of demand in which even there is small change in the price can causes heavy change in the quantity demanded

If the demand is inelastic in nature then the value of price elasticity of demand is less than 1 in absolute value

So the correct answer here is option A