Question

Price elasticity of demand is best defined as ______.

Options

• Change in the tastes of consumers at different prices

• Change in demand when income of the consumer increases

• The rate of response of demand to a change in price

• The rate of response of demand to change in price of related goods

Answer 1

Price elasticity of demand is best defined as the rate of response of demand to a change in price.

Explanation:

Price elasticity measures how responsive demand is to a change in the good’s own price. Income changes relate to income elasticity, and related-good prices relate to cross elasticity.