Question

__________ of demand is the degree of responsiveness of the demand for a commodity to a change in its price.

• A. Income elasticity
• B. Substitution elasticity
• C. Price elasticity
• D. Cross Elasticity

Answer 1

The correct option is C Price elasticity

Income elasticity : Income elasticity of demand refers to the sensitivity of the quantity demanded for a certain good to a change in real income of consumers who buy this good, keeping all other things constant.

Substitution elasticity : The elasticity of substitution between factors in production relates the change in the ratio of factors used in a production process to a given change in the factor price ratio.

Price elasticity : The degree of responsiveness of quantity demanded to changes in price of commodity is known as price elasticity of demand.

Cross Elasticity : The cross elasticity of demand is an economic concept that measures the responsiveness in the quantity demanded of one good when the price for another good changes.

$\therefore$ Cross elasticity of demand is the degree of responsiveness of the demand for a commodity to a change in its price.