When studying how some event or policy affects a market,on what does elasticity provide information
A)the direction and the efficiency of the effect on the market
B)the direction and the magnitude of the effect on the market
C)the magnitude and the efficiency of the effect on the market
D)the efficiency and the equity of the effect on the market

Question

Quizplus · Accepted Answer

Elasticity provides information about both the direction and magnitude of the effect on the market. Specifically, it measures how much the quantity demanded or supplied changes in response to a change in price or another factor affecting the market. If the elasticity is high (greater than 1), then a small change in price or policy will lead to a relatively large change in quantity, indicating a sensitive or responsive market. If the elasticity is low (less than 1), then a large change in price or policy will lead to a relatively small change in quantity, indicating an insensitive or unresponsive market. Therefore, understanding the elasticity of demand or supply can help policymakers and analysts predict and evaluate the effects of various interventions in the market.

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