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15 May, 14:59

Price elasticity of demand refers to the ratio of the: 1. percentage change in price of a product in response to the percentage change in quantity demanded of the good. 2. percentage change in price of a product in response to the percentage change in buyers income. 3. percentage change in quantity demanded of a product in response to the percentage change in the price of the good. 4. percentage change in quantity demanded of a product in response to the percentage change in price of another product. 5. none of the above.

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  1. 15 May, 16:43
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    Answer: 3. percentage change in quantity demanded of a product in response to the percentage change in the price of the good.

    Explanation:

    As you well know, prices of goods can usually have an effect on the demand for a good. This phenomenon is known as Price Elasticity of Demand.

    Price Elasticity of Demand is simply a measure of how people respond to a change in the price of a good. Do they buy it more or less or does the demand not change at all.

    It is calculated by dividing the percentage change in quantity demanded of a product by the percentage change in the price of the good.
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