Multiple Choice
Which of the following is the most obvious factor affecting the price elasticity of demand for a good?
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4. Elasticity
Determinants of Price Elasticity of Demand
Multiple Choice
A change in the number of buyers is a determinant of which of the following market variables?
A
Price elasticity of supply
B
Market demand
C
Market supply
D
Price elasticity of demand
Verified step by step guidance1
Understand the concept of market demand and market supply: Market demand represents the total quantity of a good or service that all buyers in the market are willing and able to purchase at various prices, while market supply represents the total quantity that all sellers are willing and able to sell.
Recognize that the number of buyers directly affects market demand because more buyers typically increase the total quantity demanded at each price, shifting the demand curve.
Recall that price elasticity of demand measures how much the quantity demanded responds to a change in price, and price elasticity of supply measures how much quantity supplied responds to price changes; these elasticities depend on responsiveness, not the number of buyers.
Conclude that a change in the number of buyers changes the market demand curve (shifts it), but does not directly affect market supply or the price elasticities of demand or supply.
Therefore, the determinant influenced by a change in the number of buyers is the market demand.
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