What describes how much demand changes in response to price changes?

The concept that describes how much demand changes in response to price changes is known as the Price Elasticity of Demand. This measure indicates the sensitivity of consumers to changes in the price of a good or service. When the price of a product increases or decreases, the extent to which the quantity demanded changes can vary significantly based on whether the good is considered a necessity or a luxury, as well as the availability of substitutes.

For instance, if the price of a product increases and the quantity demanded decreases significantly, this indicates that the demand is elastic. Conversely, if a small change in price leads to little change in quantity demanded, the demand is considered inelastic. This understanding is crucial for businesses and policymakers because it helps predict consumer behavior and aids in making informed pricing decisions.

In contrast, the other options pertain to different concepts. For example, Price Elasticity of Supply relates to how the quantity supplied of a good changes in response to price changes, Demand Curve Movement describes shifts in the overall demand due to factors other than price changes, and Supply Shift refers to changes in the supply curve caused by factors like changes in production costs or technology. These concepts are important, but they do not specifically capture the relationship between demand changes and price changes.