The Price Elasticity of Demand Measures

question 366

Multiple Choice

The price elasticity of demand measures

• A) how often the price of a good changes.
• B) the slope of a budget curve.
• C) how sensitive the quantity demanded is to changes in demand.
• D) the responsiveness of the quantity demanded to changes in price.

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Definitions:

Market Demand

The total quantity of a good or service that all consumers are willing and able to purchase at various prices during a given period.

Nondiscriminating Pure Monopolist

A monopolist who sells their product at the same price to every customer, not charging different prices to different buyers.

Industry Demand Curve

A graph showing the relationship between the price of a good and the total amount of the good all consumers are willing to purchase within a specific industry.

Welfare or Efficiency Loss

The decrease in economic efficiency, often measured as the loss of consumer or producer surplus, due to deviations from perfect competition.