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If the absolute value of the price elasticity of demand for aspirin equals 0.8 then

A. the demand for aspirin is elastic.
B. aspirin is a normal good.
C. the demand for aspirin is inelastic.
D. aspirin has few substitutes.

User Squiter
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1 Answer

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Final answer:

If the absolute value of the price elasticity of demand for aspirin equals 0.8, it means that the demand for aspirin is inelastic.

Step-by-step explanation:

The absolute value of price elasticity of demand measures the responsiveness of demand to a change in price. In this case, if the absolute value of the price elasticity of demand for aspirin equals 0.8, it means that demand for aspirin is inelastic. Inelastic demand means that a change in price will result in a proportionally smaller change in quantity demanded.

This implies that even if there is a technological breakthrough in the production of aspirin that reduces the price, the quantity demanded will not increase significantly. Aspirin is not a normal good and does not have few substitutes.

User James Dean
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