The price elasticity of demand is defined as the ratio of the _____ other factors held constant.
A) percentage change in quantity demanded to the percentage change in price
B) percentage change in the price of an input to the percentage change in the price of the good
C) change in the price of a good to the change in the total revenue
D) percentage change in price of the good to the percentage change in the consumers' income
E) percentage change in quantity demanded to the percentage change in the price of a competitor's good

Question

Quizplus · Accepted Answer

The price elasticity of demand is always calculated as the percentage change in quantity demanded divided by the percentage change in price, holding all other factors constant. This formula gives us a measure of how responsive consumers are to changes in price, without being confounded by changes in other factors that might also affect demand.

The Price Elasticity of Demand Is Defined as the Ratio