Understanding Elasticity of Demand

Medium Microeconomics Elasticity

In a certain market, the price elasticity of demand for a product is calculated to be -1.5. This means that for every 1% increase in the price of the product, the quantity demanded decreases by 1.5%. Based on this information, which of the following statements is true regarding the demand for this product?

The demand for the product is elastic, and consumers are highly responsive to price changes.

The demand for the product is inelastic, indicating that consumers are relatively unresponsive to price changes.

The demand for the product has unitary elasticity, meaning that changes in price do not affect total revenue.

Hint

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