Question : Which of the following is a characteristic of demand elasticity?
Option 1: It measures the responsiveness of quantity demanded to changes in price.
Option 2: It measures the responsiveness of quantity supplied to changes in price.
Option 3: It measures the responsiveness of demand to changes in income.
Option 4: It measures the responsiveness of demand to changes in the cost of production.
Correct Answer: It measures the responsiveness of quantity demanded to changes in price.
Solution : The correct answer is (a) It measures the responsiveness of quantity demanded to changes in price.
Demand elasticity is a concept in economics that quantifies how sensitive the quantity demanded of a good or service is to changes in its price. It measures the percentage change in quantity demanded resulting from a percentage change in price. A high demand elasticity indicates that the quantity demanded is highly responsive to changes in price, while a low demand elasticity suggests that the quantity demanded is not very responsive to price changes.
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