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Question
Elasticity of demand for two goods A and B is -2 and -3 respectively. Then good A has higher elasticity.
Options
True
False
Solution
This statement is False.
Explanation:
Good B has a higher elasticity because -3 (the elasticity of demand for good B) is more elastic than -2 (the elasticity of demand for good A). The more negative the elasticity value, the more elastic the demand is.
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