Correct option is A
The correct answer is: (A) Price elasticity of demand
Explanation:
Price elasticity of demand refers to the measure of responsiveness of the quantity demanded of a good or service to a change in its price. It indicates how much the demand for a product changes when its price increases or decreases.
Price elasticity of demand refers to the measure of responsiveness of the quantity demanded of a good or service to a change in its price. It indicates how much the demand for a product changes when its price increases or decreases.
If the demand changes significantly in response to a price change, the product is considered to have high price elasticity.
Information Key Points:
If PED > 1, demand is elastic (responsive to price changes).
If PED < 1, demand is inelastic (less responsive to price changes).
If PED = 1, demand is unitary (the percentage change in quantity demanded is equal to the percentage change in price).
Knowledge Booster (Other Option Information):
Price elasticity of supply (B): This measures the responsiveness of the quantity supplied of a good to a change in its price.
Income elasticity of demand (C): This measures the responsiveness of demand to changes in consumer income.
Income elasticity of substitution (D): The concept related to substitution is usually captured under cross-price elasticity, which measures the change in demand of one good due to a change in the price of another related good.
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