165k views
5 votes
The price elasticity of demand, E, is defined as the:

- Percentage change in quantity demanded times the percentage change in price of that good.
- Unit change in price divided by the unit change in quantity demanded.
- Percentage change in quantity demanded divided by the percentage change in price of that good.
- Unit change in quantity demanded times the unit change in price of that good.

User Itsproinc
by
5.2k points

1 Answer

5 votes

Answer:

The correct answer is "Percentage change in quantity demanded divided by the percentage change in price of that good".

Step-by-step explanation:

The elasticity of demand is a measure used in economics to show the degree of response of the quantity demanded of a good or service to changes in the price it presents. It grants the percentage change of the quantity demanded about a unitary percentage change in the price, with the other variables considered constant.

The E is a measure of the sensitivity of the quantity demanded of a good or service to changes in its price. Its formula normally produces a negative result due to the inverse nature of the relationship between the price and the quantity demanded.

Have a nice day!

User Jasmyn
by
5.8k points