Which of the following description regarding the own-price elasticity is correct? It measures the responsiveness of demand to a change in the product price, holding the values of all other variables in the demand function constant

Economics Dec 11, 2020

Which of the following description regarding the own-price elasticity is correct? It measures the responsiveness of demand to a change in the product price, holding the values of all other variables in the demand function constant. % AQ 20/QdQP Its formula can be expressed as E = % AP OP/P ?? g' a. = = b. All of the above are correct. C. d. All of the above are incorrect.

Expert Solution

Option c - All of the above are correct.

Own price elasticity measures the responsiveness of the quantity that is demanded or supplied of the good to a change in its price while other variables are constant. The ratio of percentage change in quantity demanded or suppled to the percentage of change in its price. Thus both options a and b are correct whicg makes option c the correct answer.

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