Which of the following economic concepts defines the responsiveness of the quantity demanded of a good to a change in its price, measured as a percentage change in quantity demanded divided by the percentage change in price?

💡 Solution & Explanation

Price elasticity of demand measures the percentage change in the quantity demanded of a good divided by the percentage change in its price, reflecting consumer sensitivity. When demand changes significantly following a small price shift, the good is considered price elastic. Other metrics like income or cross-price elasticities evaluate responses to consumer income shifts or related product prices instead.