Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
The good is a necessity
B
The good is elastic
C
The good is inelastic
D
The good has no substitutes
Understanding the Answer
Let's break down why this is correct
Answer
A price elasticity of demand greater than 1 means that the quantity demanded of a good changes a lot when its price changes. This shows that the good is considered elastic, meaning people are sensitive to price changes. For example, if the price of a popular snack increases, many people might buy much less of it because they can easily choose a different snack instead. This sensitivity suggests that consumers have alternatives or that the good is not a necessity for them. So, when prices go up, the total revenue from that good may decrease because fewer people are buying it.
Detailed Explanation
When the price elasticity of demand is greater than 1, it means that people buy a lot less of the good if the price goes up. Other options are incorrect because Some might think that a good with high demand is a necessity; It's easy to confuse elastic with inelastic.
Key Concepts
Price Elasticity of Demand
Topic
Understanding Demand and Supply
Difficulty
easy level question
Cognitive Level
understand
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