Final answer:
Price elasticity of demand measures the responsiveness of quantity demanded to price changes. The correct answer is c, and it's fundamental in understanding how consumers will react to price adjustments for goods and services.
Step-by-step explanation:
The price elasticity of demand measures the responsiveness of quantity demanded to price changes. Therefore, the correct answer is c. The responsiveness of quantity demanded to price changes.
Price elasticity provides insight into how much the quantity demanded of a good or service changes when its price changes. If the demand for a product is elastic, a small change in price could lead to a significant change in the quantity demanded. Conversely, if the demand is inelastic, the quantity demanded doesn't change much with price fluctuations. Understanding elasticity is crucial for businesses as they make pricing decisions that affect revenue and profitability. Factors such as consumer income, preferences, and prices of related goods play roles in affecting the quantity demanded, hence contributing to the concept of elasticity beyond just price.
For example, if the price of a good increases by 10% and the quantity demanded decreases by 20%, the price elasticity of demand would be -2, indicating elastic demand.