Price Elasticity of Demand Basics

Steps:

• Recall that elasticity measures how quantity demanded responds to economic changes.
• Identify price elasticity of demand as specifically tied to the product's own price.
• Eliminate options focusing on income (A) or other goods' prices (B, D).
• Select the option describing response to the product's price change.

Why C is correct:

• Price elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in the product's own price, per the standard economic formula: $E_d = \frac{\% \Delta Q_d}{\% \Delta P}$.

Why the others are wrong:

• A describes income elasticity of demand.
• B describes cross-price elasticity for complements.
• D describes cross-price elasticity for substitutes.

Final answer: C