One of the most important concepts in marketing is the price elasticity of demand, which is the:

• A. difference between supply and demand at equilibrium
• B. total quantity demanded at a given price
• C. change in price resulting from a change in demand
• D. percentage change in quantity demanded divided by the percentage change in price

Answer: (D)

Verified step by step guidance

1. Understand that price elasticity of demand measures how sensitive the quantity demanded of a good is to a change in its price.
2. Recall the formula for price elasticity of demand, which is the ratio of the percentage change in quantity demanded to the percentage change in price, expressed as: \[\text{Price Elasticity of Demand} = \frac{\% \text{ change in quantity demanded}}{\% \text{ change in price}}\]
3. Recognize that this concept helps businesses and economists understand how changes in price might affect total revenue and consumer behavior.
4. Note that price elasticity is not about the difference between supply and demand, nor the total quantity demanded at a given price, nor the change in price resulting from a change in demand.
5. Conclude that the correct definition of price elasticity of demand is the percentage change in quantity demanded divided by the percentage change in price.