The Price Elasticity of Demand Measures

question 79

Multiple Choice

The price elasticity of demand measures

• A) the consumers' sensitivity to a price change.
• B) the producers' sensitivity to a price change.
• C) how much the market price changes in response to a change in demand.
• D) how much the demand changes in response to a change in income.

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Definitions:

Variable Cost

A cost that changes in proportion with the level of output or activity.

Fixed Cost

Expenses that do not change with the level of output or sales, remaining constant even if the business activity varies.

Activity Variance

The difference between what was expected in terms of expenses or revenues for a particular activity level and what was actually realized.

Vehicle Operating Cost

The total expense associated with keeping a vehicle running, including fuel, maintenance, insurance, and depreciation.