Question

12. What is elasticity of demand?

Answer 1

Answer:

(4) A measure of how consumers react to a  change in price.

Explanation:

• The elasticity of demand is simply the change in demand due to change in the price of a product.
• As we know demand is proportionate to the price of a product, when products are produced at a lower  price, there is an increase in the demand.Similarly, if products are produced at a higher price, the demand also falls.
• The elasticity of demand is a measure of how consumers react to a  change in price. It helps consumers to understand the market price of a commodity and thereby, reacts according to the price.