Question

Which of the following best explains the meaning of the term price elasticity of demand as used in economics?

the extent to which consumers’ purchases respond to a certain change in a product’s price.

the tendency of shortages to disappear in the long run.

the tendency of the market price to return to its equilibrium value if disturbed.

the extent to which an economy can adapt to changing world conditions.

Answer 1

Price elasticity explains the change the consumer demand will see in terms of the change in the price of the goods, if the change is more that means the good is elastic and if the change is less that means the good is inelastic.

The answer is "A". the extent to which consumers’ purchases respond to a certain change in a product’s price.