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      Question

      ______ is defined as the ratio of percentage change in

      the quantity demanded of a good caused by a percentage change in price.
      A Income Elasticity Correct Answer Incorrect Answer
      B Price Elasticity Correct Answer Incorrect Answer
      C Cross Elasticity Correct Answer Incorrect Answer
      D Demand Elasticity Correct Answer Incorrect Answer
      E None of the above Correct Answer Incorrect Answer

      Solution

      1.     Price Elasticity: The concept of price elasticity measures how responsive the quantity demanded or supplied of a good is to changes in its price. Elastic demand or supply means that quantity significantly changes in response to price changes, while inelastic demand or supply means quantity changes only slightly in response to price changes.   Elasticity = (% Change in Quantity demande)/(% change in price)

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