Question

Which of the following is a measure of the sensitivity of customers to changes in price?

A) a liquidity ratio
B) demand sensitivity
C) price elasticity of demand
D) marginal analysis
E) basing-point

Answer 1

The measure of customer sensitivity to price changes is the price elasticity of demand, which calculates the responsiveness of quantity demanded to price changes.

Step-by-step explanation:

The measure of the sensitivity of customers to changes in price is known as the price elasticity of demand. This economic concept reflects the responsiveness of the quantity demanded of a good to changes in its price. To calculate it, we divide the percentage change in quantity demanded by the percentage change in price.

The outcome indicates whether demand is elastic (>1), unit elastic (=1), or inelastic (<1), showing how much demand will change in response to price fluctuations.