What term refers to the responsiveness of consumers and suppliers to changes in price?

The correct term that refers to the responsiveness of consumers and suppliers to changes in price is elasticity. Elasticity measures how much the quantity demanded or supplied of a good or service responds to changes in price. If the demand for a product is elastic, it means that consumers will significantly change their quantity demanded in response to a price change. Conversely, if demand is inelastic, quantity demanded will not change much even with a significant price change.

Elasticity is crucial because it helps businesses and policymakers understand how changes in prices will affect overall market behavior. High elasticity suggests that consumers are very sensitive to price changes, which can influence pricing strategies and revenue predictions.

While the supply curve illustrates the relationship between price and the quantity supplied, it does not indicate the degree of responsiveness. A demand shift indicates a change in demand due to factors other than price, and market equilibrium describes the point where the quantity demanded equals the quantity supplied, which also does not directly address responsiveness to price changes. Therefore, elasticity specifically captures the concept of responsiveness in a clear and measurable way.