A measure of the degree to which the quantity demanded or supplied of a good or service changes in response to a change in price

• A. Demand
• B. Elasticity
• C. Law of Demand
• D. Supply

Answer: (B)

Elasticity tells you how much quantity demanded or supplied changes when price changes. It’s calculated as the percent change in quantity divided by the percent change in price, so it measures the responsiveness of buyers or sellers to price moves. If elasticity is large, quantity reacts a lot to price changes (elastic); if it’s small, quantity changes little (inelastic). This idea applies to both sides: price elasticity of demand looks at how demand responds, while price elasticity of supply looks at how supply responds.

Why this is the right concept here: the statement is describing responsiveness to price changes, not just the direction of the relationship. Demand describes how much people want at different prices, but not how strongly they respond to price shifts. The Law of Demand states the inverse relation between price and quantity demanded, but it doesn’t quantify the degree of response. Supply describes the quantity producers are willing to sell at different prices, but again, not the responsiveness measure. Elasticity integrates both perspectives into a single measure of responsiveness.