Which concept measures how much quantity demanded responds to a change in price?

Which concept measures how much quantity demanded responds to a change in price?

• A. Price elasticity
• B. Opportunity cost
• C. Federalism
• D. Rule of law

Answer: (A)

Price elasticity of demand measures how sensitive the quantity demanded is to changes in price. It tells us how much buyers will adjust their purchases when prices rise or fall. If a small price change leads to a large change in the amount bought, demand is elastic; if the price change causes only a little change in quantity, demand is inelastic. This concept is usually calculated as the percentage change in quantity demanded divided by the percentage change in price. For example, many luxury items have elastic demand because shoppers can cut back or delay purchases when prices go up, while essential items like basic medicines tend to have inelastic demand since people still need them even if prices rise. The other choices describe different ideas: opportunity cost is about what is given up to choose one option over another, federalism is about how government power is shared, and rule of law concerns the system of laws guiding governance.

Price elasticity of demand measures how sensitive the quantity demanded is to changes in price. It tells us how much buyers will adjust their purchases when prices rise or fall. If a small price change leads to a large change in the amount bought, demand is elastic; if the price change causes only a little change in quantity, demand is inelastic. This concept is usually calculated as the percentage change in quantity demanded divided by the percentage change in price. For example, many luxury items have elastic demand because shoppers can cut back or delay purchases when prices go up, while essential items like basic medicines tend to have inelastic demand since people still need them even if prices rise. The other choices describe different ideas: opportunity cost is about what is given up to choose one option over another, federalism is about how government power is shared, and rule of law concerns the system of laws guiding governance.