What do we call the responsiveness of the quantity demanded to a change in price?

The responsiveness of the quantity demanded to a change in price is referred to as demand elasticity. This concept helps us understand how much the quantity of a good or service demanded by consumers will change when there is a shift in its price. Demand elasticity is quantified as the percentage change in quantity demanded divided by the percentage change in price.

For example, if the price of a product increases and the quantity demanded decreases significantly, the demand for that product is considered to be elastic. Conversely, if quantity demanded remains relatively unchanged despite price changes, the demand is inelastic. Understanding demand elasticity is crucial for businesses and policymakers, as it assists in pricing strategies, tax policies, and predicting consumer behavior in response to market changes.

Other terms like supply elasticity and price sensitivity relate to different aspects of economics, but they do not specifically capture the relationship between the quantity demanded and price in the way demand elasticity does.