The price elasticity of demand is defined as ?
Correct answer: C. the percentage change in the quantity demanded of a good divided by the percentage change in the price of that good
- A. the percentage change in the quantity demanded divided by the percentage change in income.
- B. the percentage change in income divided by the percentage change in the quantity demanded
- C. the percentage change in the quantity demanded of a good divided by the percentage change in the price of that good
- D. none of these answers
Explanation
Price elasticity compares the percentage change in quantity demanded with the percentage change in price. Income belongs in the formula for income elasticity, not price elasticity.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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