We calculate the price elasticity of demand as the
A) ratio of the percentage change in price to the percentage change in quantity.
B) change in quantity divided by the change in price.
C) ratio of the percentage change in the quantity demanded to the percentage change in price.
D) equilibrium quantity divided by the equilibrium price.
E) percentage change in the quantity demanded divided by the percentage change in income.

Question

Quizplus · Accepted Answer

The price elasticity of demand is calculated by taking the percentage change in the quantity demanded of a good and dividing it by the percentage change in the price of that good. This gives us a ratio that tells us how responsive consumers are to changes in the price of a good - a higher ratio (greater than 1) indicates that demand is relatively elastic, while a lower ratio (less than 1) indicates that demand is relatively inelastic. Option C accurately describes this calculation process.

We Calculate the Price Elasticity of Demand as the