Answer:
The answer is: The price elasticity of demand for a good measures the willingness of buyers of the good to buy less of the good as its price increases.
Explanation:
The price elasticity of demand measures the change in the quantity demanded of a product in relation to a change in its price.
The formula for determining the price elasticity of demand (PED) is:
PED = % of the change in Quantity Demanded / % of the change in price
If a good has a high PED (≥ 1) then it is called elastic, which means that any change in the price will change the quantity demanded in a greater proportion. If a good has a low PED (≤ 1) then it is called inelastic, which means that any change in the price will affect the quantity demanded in a smaller proportion.
Usually goods or services considered luxurious (e.g. gourmet cheese), tend to be very elastic (high PED). While products considered basic necessities (e.g. gasoline) tend to be very inelastic (low PED).
The price elasticity of demand is referred to as the change in the willingness of a customer to buy the same product with a given change in its price. So, the correct option is A.
Price elasticity of demand is always calculated by the change in the demand of a product due to a change in its price for the same market it is available for sale in.
There is an indirect relationship between the price of a product and the quantity demanded for such product. So, if price decreases, the demand will increase and vice versa.
The change in quantity is always determined by the change in external factors such as change in consumer tastes and preferences, change in government regulations, price of substitute goods.
Hence, the correct option is A; the price elasticity of demand measures the willingness of buyers to buy less of the good as price increases.
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