Price Elasticity of Demand Short Answer Type Questions Question
1. Define price elasticity of demand. Answer: Price elasticity of demand expresses the response of quantity demanded
of a good to a change in its price, given the consumer’s income, his tastes
and, prices of all other goods remain the same. In other words, it is measured
as percentage change in quantity demanded divided by the percentage change in
price, other things remaining equal.That is, According
to Alfred Marshall in his famous book, ‘Principles of Economics’, while
introducing the concept of the elasticity of demand, “The elasticity of demand
in a market is great or small according to whether the amount demanded
increases much or little for a given fall in price, and diminishes much or
little for a given rise in price.” Question 2. How is price
elasticity of demand measured? Answer: It is measured as percentage change in quantity demanded divided by the
percentage change in price, other things remaining equal. That is, In
other words, elasticity i…
