Question

An elasticity is:

1) i. a measure of the sensitivity of a variable to a change in another variable
2) ii. defined as the ratio of the percentage change in the affecting variable to the percentage change in the affected variable
3) iii. defined as the ratio of the percentage change in the affected variable to the percentage change in the affecting variable
4) iv. invariant (or insensitive) to the units in which variables are measured

Answer 1

Elasticity is a concept in economics that measures the responsiveness of one variable to changes in another variable. It is used to analyze various economic connections, and it is invariant to the units of measurement.

Step-by-step explanation:

Elasticity is a concept in economics that measures the responsiveness of one variable to changes in another variable. It is defined as the ratio of the percentage change in the affected variable to the percentage change in the affecting variable. Therefore, the correct answer is option iii. Elasticity is used to analyze the sensitivity of various economic connections, such as the income elasticity of demand or the wage elasticity of labor supply. It is also important to note that elasticity is invariant to the units in which variables are measured.