Price elasticity of demand is defined as
A)slope divided by price.
B)percentage change in price divided by percentage change in quantity demanded.
C)percentage change in quantity demanded divided by percentage change in price.
D)the inverse of the price elasticity of supply.

Question

Quizplus · Accepted Answer

Price elasticity of demand (PED) is calculated as the percentage change in quantity demanded divided by the percentage change in price. This formula helps to determine the responsiveness of consumers to a change in price. A higher value of PED indicates that a small change in price will cause a significant change in the quantity demanded whereas a lower value of PED indicates that consumers are less sensitive to price changes.

Price Elasticity of Demand Is Defined as