How is the price elasticity of demand best defined?

Show Answers

The ratio of the percentage change in quantity demanded to the percentage change in consumer income.The ratio of the percentage change in consumer income to the percentage change in quantity demanded.The ratio of the percentage change in quantity demanded for a product to the percentage change in its price.None of the above options are correct.

Explanation

Price elasticity of demand measures how much the quantity demanded of a product responds to changes in its price. It is calculated as the percentage change in quantity demanded divided by the percentage change in the product's price. Options A and B confuse this with income elasticity, while option D is incorrect.