The price elasticity of demand measures
A) the responsiveness of quantity demanded to a change in price.
B) the responsiveness of price to a change in competition.
C) the change in quantity demanded due to a change in price of a substitute good.
D) the change in price due to a change in demand.

Question

Quizplus · Accepted Answer

The price elasticity of demand measures the responsiveness of quantity demanded to a change in price. It calculates the percentage change in quantity demanded with respect to the percentage change in price. It helps firms to determine the effect of a change in price on their revenue and sales. It also assists firms in making pricing decisions by measuring the sensitivity of demand to price changes.

The Price Elasticity of Demand Measures