Question : When the price elasticity of demand is greater than 1, the demand is:
Option 1: Inelastic
Option 2: Unitary elastic
Option 3: Perfectly elastic
Option 4: Elastic
Correct Answer: Elastic
Solution : The correct answer is (d) Elastic
When the price elasticity of demand is greater than 1, it indicates an elastic demand. Elastic demand means that the quantity demanded is highly responsive to changes in price. In other words, a small change in price leads to a relatively larger change in the quantity demanded. This indicates that consumers are sensitive to price changes, and a price increase would result in a significant decrease in quantity demanded, while a price decrease would result in a significant increase in quantity demanded.
