Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Theory of Consumer behaviour

Question:

There were 2 kids who were discussing price elasticity of demand.
Garv said, "Price elasticity of demand is a measure of the responsiveness of the demand for a good to changes in its price."
Then Adhyayan said, "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."
Both of them started arguing that they were correct and the other person was wrong.
In your view, who is correct?

Options:

Garv is correct

Adhyayan is correct

Both are correct

No one of them is correct

Correct Answer:

Both are correct

Explanation:

Price elasticity of demand measures the degree of responsiveness of the quantity demanded of a commodity to the change in price of the good. It is measured as: 

Ped =  \(\frac{\text {% change in quantity demanded}}{\text {% change in price }}\)