What does price elasticity of demand measure ?
Correct answer: C. The responsiveness of demand to price changes
- A. Changes in price caused by changes in demand
- B. The rate of change of sales
- C. The responsiveness of demand to price changes
- D. The value of sales at a given price
Explanation
Price elasticity of demand measures how strongly the quantity demanded responds to a change in price. It is calculated as the percentage change in quantity demanded divided by the percentage change in price.
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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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