📚 Learning Guide
Price Elasticity of Demand
easy

Price elasticity of demand is to responsiveness of quantity demanded as consumer confidence is to what?

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Learning Path
Learning Path

Question & Answer
1
Understand Question
2
Review Options
3
Learn Explanation
4
Explore Topic

Choose the Best Answer

A

Willingness to spend

B

Ability to save

C

Price stability

D

Market saturation

Understanding the Answer

Let's break down why this is correct

Answer

Price elasticity of demand is a measure of how much the amount people buy changes when the price changes. Consumer confidence is a measure of how optimistic people feel about the economy and their own financial situation. Just as elasticity tells us how responsive buying is to price, consumer confidence tells us how responsive spending is to feelings about the future. For example, when confidence is high, people are more likely to buy more and spend more, just as a high elasticity means people will buy more when prices drop. Thus, consumer confidence is to consumer spending what price elasticity of demand is to quantity demanded.

Detailed Explanation

Price elasticity tells how much people buy when the price changes. Other options are incorrect because People might think saving ability matters, but elasticity is about spending, not saving; Price stability is about how prices stay the same, not how people react.

Key Concepts

Price Elasticity of Demand
Consumer Behavior
Market Dynamics
Topic

Price Elasticity of Demand

Difficulty

easy level question

Cognitive Level

understand

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