In the price elasticity of demand formula, what does the numerator represent?

In the price elasticity of demand formula, what does the numerator represent?

• A. The percentage change in quantity demanded
• B. The percentage change in price
• C. The percentage change in quantity supplied
• D. The change in price over quantity demanded

Answer: (A)

The price elasticity of demand shows how much quantity demanded responds to price changes. The numerator in that formula is the percentage change in quantity demanded. It tells you how big the buyer response is when price moves. The larger this percentage change, the more sensitive demand is to price. The denominator is the percentage change in price, so together they form the elasticity ratio. For example, if price goes up 10% and quantity demanded falls 20%, the elasticity is 20% divided by 10%, giving an elasticity magnitude of 2. The other options describe the wrong part of the formula or relate to supply, not demand.

The price elasticity of demand shows how much quantity demanded responds to price changes. The numerator in that formula is the percentage change in quantity demanded. It tells you how big the buyer response is when price moves. The larger this percentage change, the more sensitive demand is to price. The denominator is the percentage change in price, so together they form the elasticity ratio. For example, if price goes up 10% and quantity demanded falls 20%, the elasticity is 20% divided by 10%, giving an elasticity magnitude of 2. The other options describe the wrong part of the formula or relate to supply, not demand.