Which of the following statements about the price elasticity of demand is NOT correct?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → It is the change in quantity demanded divided by the change in price.
Price elasticity of demand divides the percentage change in demand by the percentage change in price. Plain changes in quantity and price would give the slope of the demand curve instead.
Option (1) It is a pure number. — True. Percentages cancel the units, so elasticity has none.
Option (2) It is a negative number, since demand and price are negatively related. — True. Demand falls when price rises, so the ratio has a minus sign.
Option (3) For simplicity, its absolute value is generally used. — True. The minus sign is dropped and the size of the number is used.
Option (4) It is the change in quantity demanded divided by the change in price. — False. Elasticity uses percentage changes; the ratio of plain changes measures the slope.
NCERT (2026-27): “2.6 Elasticity of Demand Demands for some goods are very responsive to price changes while demands for certain others are not so responsive to price changes. Price elasticity of demand is a measure of the responsiveness of the demand for a good to changes in its price. Price elasticity of demand for a good is defined as the percentage change in demand for the good divided by the percentage change in its price. …” “Note that the price elasticity of demand is a negative number since the demand for a good is negatively related to the price of a good. However, for simplicity, we will always refer to the absolute value of the elasticity.” “Summary … The elasticity of demand is a pure number. …” |