Concept:Price elasticity of demand measures how strongly the quantity demanded responds to a change in price.
Explanation:When demand is price elastic, consumers change their quantity demanded significantly after a price change.
The percentage change in quantity demanded is larger than the percentage change in price.
For instance, a
10% price increase might cause a
15% fall in quantity demanded.
The elasticity ratio becomes greater than
1 in that case.
Price elasticity of demand is often negative due to the inverse relationship between price and quantity.
Hence, we compare the absolute value of the elasticity coefficient.
Therefore, price elastic demand is identified by the condition
∣Ed∣>1.
This indicates that demand is highly responsive to price movements.
Answer:A. greater than one