Which of the following statements about the price elasticity of demand is correct? The price elasticity of demand for a good measures the willingness of buyers of the good to buy less of the good as its price increases. Price elasticity of demand reflects the many economic, psychological, and social forces that shape consumer tastes. If good x has close substitutes and good y does not have close substitutes, then the demand for good x will be more elastic than the demand for good y. All of the above are correct.

The answer is: The price elasticity of demand for a good measures the willingness of buyers of the good to buy less of the good as its price increases.

Explanation:

The price elasticity of demand measures the change in the quantity demanded of a product in relation to a change in its price.

The formula for determining the price elasticity of demand (PED) is:

PED = % of the change in Quantity Demanded / % of the change in price

If a good has a high PED (≥ 1) then it is called elastic, which means that any change in the price will change the quantity demanded in a greater proportion. If a good has a low PED (≤ 1) then it is called inelastic, which means that any change in the price will affect the quantity demanded in a smaller proportion.

Usually goods or services considered luxurious (e. g. gourmet cheese), tend to be very elastic (high PED). While products considered basic necessities (e. g. gasoline) tend to be very inelastic (low PED).