When studying how some event or policy affects a market,elasticity provides information on the
A) government expenditures associated with the policy.
B) costs and benefits of the effect.
C) allocative efficiency of the effect.
D) direction and magnitude of the effect.

Question

Quizplus · Accepted Answer

Elasticity measures the responsiveness of quantity demanded or quantity supplied to changes in price or other variables. Therefore, it provides information on the direction and magnitude of the effect that the event or policy has on the market. It does not provide information on government expenditures, costs and benefits, or allocative efficiency.

When Studying How Some Event or Policy Affects a Market,elasticity