What does demand elasticity measure?

Demand elasticity measures the responsiveness of quantity demanded to price changes. This concept reflects how sensitive consumers are to changes in price for a particular good or service. When the price of a product increases or decreases, elasticity helps analyze how much the quantity demanded will change in response to that price change.

For instance, if a product has high elasticity, a small change in price can lead to a significant change in the quantity demanded. Conversely, if a product is inelastic, price changes will have little effect on the quantity demanded. This concept is crucial for businesses and policymakers as it informs pricing strategies, tax policies, and understanding consumer behavior.

The other options do not accurately capture the essence of demand elasticity. For example, measuring total supply doesn't relate to how consumers respond to price changes. The statement about how demand changes when supply is altered is more related to supply and demand dynamics rather than specifically focusing on elasticity. Stability of prices over time pertains to market conditions and inflation rather than the responsiveness of demand. Thus, understanding demand elasticity directly connects to assessing consumer price sensitivity, which is what option C correctly identifies.