222k views
3 votes
What is the biggest consideration or the most important thing to notice about your result in your elasticity of demand calculation?

a) Magnitude of the percentage change
b) Direction of the percentage change
c) Sign of the percentage change
d) Unitary elasticity

1 Answer

3 votes

Final answer:

The most important consideration in elasticity of demand calculation is the magnitude of the percentage change, which shows the responsiveness of quantity demanded to price changes. The correct option is A.

Step-by-step explanation:

The biggest consideration in your elasticity of demand calculation is the magnitude of the percentage change. This value indicates how much the quantity demanded of a good or service changes in response to a change in price. Elasticities can be categorized as elastic (greater than one), inelastic (less than one), or unitary (equal to one).

The sign of the percentage change is also important as it indicates the direction of the change in demand relative to price. However, because price and quantity demanded generally move in opposite directions, price elasticity of demand is often reported as an absolute value to reflect the magnitude of responsiveness, regardless of direction.

User Polve
by
9.1k points