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Question
True or False with Reason:
Price Elasticity of Demand of two goods A and B is (-) 3 and (-) 4 respectively. Good A has higher elasticity.
True or False
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Solution
This statement is false.
Explanation:
- Elasticity is compared by ignoring the negative sign and using absolute values.
- Absolute value for good A is 3, and for good B is 4.
- Since 4 is greater than 3, good B has higher elasticity, not good A.
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