00:01
So elasticity here is measuring responsiveness, right? when we talk about elasticity, it's trying to measure how people's behavior changes responsiveness when the market conditions change, right? so when we talk about the price elasticity of demand, the formula tries to capture that, right? the formula says that this is equal to by definition how much quantity changes in percentage terms when the price changes.
00:36
So if the price changes goes up a certain amount, how much do people change the behavior? that's what elasticity is trying to measure.
00:46
So the correct answer here is a, right? comparing the percent change in quantity demanded to percent change in price.
01:04
That's exactly what the elasticity is, right? it's not absolute changes, right? and let me rule out the rest for you really quickly, right? b, absolute is slope, right? we already have a name for that.
01:21
Slope is not elasticity, right? you probably know all about the slope of the line.
01:26
The absolute changes measure the slope...