The price elasticity of demand is measured by _____ the percentage change in _____ the percentage change in _____.
A)dividing;price by;quantity demanded
B)dividing;quantity demanded by;price
C)subtracting;price from;quantity demanded
D)adding;price to;quantity demanded

Question

Quizplus · Accepted Answer

The price elasticity of demand measures the responsiveness of the quantity demanded to a change in price. It is calculated by dividing the percentage change in quantity demanded by the percentage change in price. This means that the correct formula is (ΔQ/Q) ÷ (ΔP/P), where ΔQ is the change in quantity demanded, Q is the initial quantity demanded, ΔP is the change in price, and P is the initial price. Choice B is the only option that correctly identifies this formula.

The Price Elasticity of Demand Is Measured by _____ the Percentage