In microeconomics, what is the best definition of elasticity?

• A. The total benefit consumers receive from a good, measured by consumer surplus
• B. A measure of how responsive one variable is to a change in another variable, typically expressed as the percentage change in one variable divided by the percentage change in the other
• C. The absolute change in quantity demanded caused by a one-unit increase in price
• D. The slope of the demand curve at a point, measured as $\frac{dQ}{dP}$

Answer: (B)

Verified step by step guidance

1. Understand that elasticity in microeconomics measures responsiveness, specifically how one variable changes in response to a change in another variable.
2. Recall the general formula for elasticity, which is the percentage change in one variable divided by the percentage change in another variable.
3. Recognize that elasticity is often used to describe how quantity demanded or supplied responds to changes in price, income, or other factors.
4. Note that elasticity is a ratio of relative (percentage) changes, not absolute changes, which distinguishes it from simply measuring slope or absolute change.
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 the percentage change in one variable divided by the percentage change in the other.