In microeconomics, which definition best describes elasticity?

• A. The level of total utility a consumer receives from consuming one more unit of a good.
• B. The difference between total revenue and total cost at a given output level.
• C. A measure of how responsive one variable is to a change in another variable, typically expressed as a percentage change.
• D. The absolute change in quantity demanded when price increases by one unit.

Answer: (C)

Verified step by step guidance

1. Step 1: Understand that elasticity in microeconomics measures responsiveness, not absolute changes or utility levels.
2. Step 2: Recall that elasticity is typically defined as the percentage change in one variable divided by the percentage change in another variable.
3. Step 3: Recognize that common elasticities include price elasticity of demand, which measures how quantity demanded responds to price changes.
4. Step 4: Note that elasticity is a ratio of relative (percentage) changes, making it a unit-free measure that allows comparison across different goods or markets.
5. Step 5: Conclude that the best definition of elasticity is 'a measure of how responsive one variable is to a change in another variable, typically expressed as a percentage change.'