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According to the source, demand or supply is classified as elastic under which condition?
AThe elasticity is greater than one
BThe elasticity is equal to zero
CThe elasticity is exactly equal to one
DThe elasticity is less than one
Answer & Solution
Correct answer: A. The elasticity is greater than one
1. Table 5.1 sorts elasticity into three categories based on the size of the ratio.
2. An elastic demand or supply is one where the elasticity value is greater than one.
3. A value less than one is inelastic, and a value of exactly one is unitary, so neither describes elastic.
4. Zero elasticity is a separate extreme case, not the ordinary elastic category.
_Source: OpenStax Principles of Microeconomics for AP Courses (CC BY 4.0), Ch 5 "Elasticity", section 5.1 | Price Elasticity of Demand and Price Elasticity of Supply_
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