Elasticity provides a guide to both
A)market stability and change in revenue as price changes.
B)responsiveness of quantity demanded to a change in price and market stability.
C)responsiveness of quantity demanded to a change in price and change in revenue as price changes.
D)technological change and change in revenue as price changes.

Question

Quizplus · Accepted Answer

Elasticity measures the responsiveness of quantity demanded to a change in price. This information can give a guide to both the change in revenue as the price changes (since a more elastic demand will lead to a larger change in revenue) and the stability of the market (since a more elastic demand suggests that consumers have more substitutes available). Option A is incorrect because it doesn't mention elasticity's role in the responsiveness of quantity demanded. Option B is partially correct but doesn't include the impact of price changes on revenue. Option D is incorrect because it mentions technological change rather than elasticity.

Elasticity Provides a Guide to Both