Price elasticity of demand is measured by the
A) percentage change in quantity demanded divided by the percentage change in price.
B) change in price divided by the change in quantity demanded.
C) change in demand divided by the change in price.
D) percentage change in quantity supplied divided by the percentage change in price.
E) percentage change in price divided by the percentage change in quantity demanded.

Question

Quizplus · Accepted Answer

Price elasticity of demand is measured by the percentage change in quantity demanded divided by the percentage change in price. This gives us a quantitative measure of how responsive consumers are to changes in price. A higher price elasticity means that a small change in price will cause a bigger percentage change in quantity demanded, whereas a lower price elasticity means that consumers are less responsive to price changes.

Price Elasticity of Demand Is Measured by the