Define the price elasticity of demand and show how it is calculated
What will be an ideal response?
The price elasticity of demand is units-free measure of the responsiveness of the quantity demanded of a good to a change in its price when all other influences on buying plans remain the same. It equals the absolute value (or magnitude) of the ratio of the percentage change in the quantity demanded to the percentage change in the price. The percentage change in quantity (price) is measured as the change in quantity (price) divided by the average quantity (price).
You might also like to view...
Financial monetary assets which often cannot be readily used in commercial exchanges are included in
A) M1. B) M2. C) prepaid accounts. D) credit cards.
Which situation is most likely to exhibit diminishing marginal returns to labor?
A) a factory that obtains a new machine for every new worker hired B) a factory that hires more workers and never increases the amount of machinery C) a factory that increases the amount of machinery and holds the number of worker constant D) None of these situations will result in diminishing marginal returns to labor.