Multiple choice

Elasticity of demand indicates

  1. change in quantity demanded

  2. rate of change in quantity demanded

  3. change in income

  4. change in prices

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Elasticity of demand measures the responsiveness or the rate of change in quantity demanded of a good in response to a change in its price. It is defined as the percentage change in quantity demanded divided by the percentage change in price.