Why Is the Price Elasticity of Demand a Relative Measure

question 94

Multiple Choice

Why is the price elasticity of demand a relative measure? That is,why is elasticity measured in percentage terms rather than in absolute terms?

• A)So the coefficient of elasticity will not be dependent on the physical units of the good.
• B)Because absolute measures do not account for the direction of the change in quantity.
• C)So that the coefficient of elasticity will not be negative.
• D)Because the absolute price or quantity demanded of a product is irrelevant to the elasticity measure.

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