ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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the quantity demanded of a good to a change in its price
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the price of a good to a change in a consumer’s income
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the price of a good to a change in the quantity demanded
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the quantity demanded of a good to a change in a consumer’s income
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Detailed explanation-1: -Price elasticity measures the responsiveness of the quantity demanded or supplied of a good to a change in its price. It is computed as the percentage change in quantity demanded-or supplied-divided by the percentage change in price.
Detailed explanation-2: -The arc price elasticity of demand measures the responsiveness of quantity demanded to a price. It takes the elasticity of demand at a particular point on the demand curve, or between two points on the curve.
Detailed explanation-3: -The price elasticity of demand is a units-free measure of the responsiveness of the quantity demanded of a good to a change in its price when all other influences on buying plans remain the same.
Detailed explanation-4: -Key Takeaways Income elasticity of demand is an economic measure of how responsive the quantity demanded for a good or service is to a change in income. The formula for calculating income elasticity of demand is the percentage change in quantity demanded divided by the percentage change in income.
Detailed explanation-5: -Income elasticity of demand measures the relationship between the consumer’s income and the demand for a certain good. It may be positive or negative, or even non-responsive for a certain product. The consumer’s income and a product’s demand are directly linked to each other, dissimilar to the price-demand equation.