ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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how responsive output is to a change in government spending
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how responsive sellers are to a change in the price of a good
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the magnitude of the change in quantity due to a change in price
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whether quantity demanded increases or decreases when price increases
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the magnitude of the change in quantity due to a change in income
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Detailed explanation-1: -Price elasticity of demand is the ratio of the percentage change in quantity demanded of a product to the percentage change in price. Economists employ it to understand how supply and demand change when a product’s price changes.
Detailed explanation-2: -Elastic is a term used in economics to describe a change in the behavior of buyers and sellers in response to a change in price for a good or service. In other words, demand elasticity or inelasticity for a product or good is determined by how much demand for the product changes as the price increases or decreases.
Detailed explanation-3: -Alfred Marshall One of Marshall’s most important contributions to microeconomics was his introduction of the concept of price elasticity of demand, which examines how price changes affect demand.
Detailed explanation-4: -Arc elasticity is also defined as the elasticity between two points on a curve. The concept is used in both economics and mathematics. In economics, is it commonly used to measure the changes between the quantity of goods demanded and their prices.