The correct answer is D.
The elasticity of demand is a measure of how responsive consumers are to changes in the price of a good or service. It is calculated by dividing the percentage change in the quantity demanded by the percentage change in the price.
A demand curve is a graphical representation of the relationship between the price of a good or service and the quantity demanded. The slope of the demand curve indicates how responsive consumers are to changes in price. A flatter demand curve indicates that consumers are more responsive to changes in price, while a steeper demand curve indicates that consumers are less responsive to changes in price.
The elasticity of demand is important because it can help businesses to understand how changes in price will affect their sales. For example, if a business knows that the demand for its product is elastic, it will be more likely to lower its prices in order to increase sales. Conversely, if a business knows that the demand for its product is inelastic, it will be more likely to raise its prices in order to increase profits.
Here is a brief explanation of each option:
- A. The distinction between changes in demand and changes in amount demanded. This is not what the elasticity of demand describes. Changes in demand refer to a shift in the demand curve, while changes in the amount demanded refer to a movement along the demand curve.
- B. A change in the incomes of the buyers in response to change in the prices of products they sell. This is not what the elasticity of demand describes. The elasticity of demand is a measure of how responsive consumers are to changes in the price of a good or service, not to changes in their income.
- C. The slope of the demand curve. This is not what the elasticity of demand describes. The slope of the demand curve indicates how responsive consumers are to changes in price, but the elasticity of demand is a more precise measure of this responsiveness.
- D. The responsiveness of price to changes in the quantity demanded. This is what the elasticity of demand describes. The elasticity of demand is a measure of how responsive consumers are to changes in the price of a good or service.