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 consumer income.
D) the change in price due to a change in demand.

Question

Quizplus · Accepted Answer

Price elasticity of demand measures the responsiveness of quantity demanded to a change in price. It measures how much the quantity demanded changes when the price changes. If the demand is elastic, a small change in price results in a large change in quantity demanded, whereas if the demand is inelastic, a change in price has a smaller effect on quantity demanded. The formula for price elasticity of demand is (Percentage change in quantity demanded)/(Percentage change in price).

The Price Elasticity of Demand Measures