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      Question

      Elasticity of demand measures the

      A responsiveness of the quantity demanded to changes in the price Correct Answer Incorrect Answer
      B responsiveness of demand to change in supply of goods Correct Answer Incorrect Answer
      C change in price due to change in demand Correct Answer Incorrect Answer
      D change in demand due to change in tastes of consumer Correct Answer Incorrect Answer

      Solution

      The price elasticity of demand measures the responsiveness of the quantity demanded to changes in the price. Demand is inelastic if it does not respond much to price changes, and elastic if demand changes a lot when the price changes. Necessities tend to have inelastic demand.

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