ELASTICITY OF DEMAND

PED of Good A is the degree of responsiveness of quantity demanded to a change in ______________, ceteris paribus.

• Price of Good A
• Price of Good B
• Supply
• Income

How is PED calculated?

• Change in price / change in quantity
• Change in quantity / change in price
• Percentage change in quantity / percentage change in price
• Percentage change in price / percentage change in quantity

When is the price elasticity of demand for a good likely to be high?

• When expenditure on the good is a small part of total expenditure
• When the good has few uses
• When the good is habit-forming
• When there are many substitutes for the good

The price of rice has increased by 10%. What is the likely percentage change in quantity demanded?

• Fall by 12%
• Fall by 5%
• Fall by 10%
• Fall by 20%

Suppose that elasticity of demand of socks is 0.7.  If the price of socks is reduced by 10%, how will sales be effected?

• sales will grow by more than 10%
• Sales will grow by 10%
• Sales will grow by less than 10%
• Sales will decrease by 10%

If the price on a product goes up the quantity demanded will go down. This follows the economic theory of:

• Law of Demand
• elasticity
• income effect
• None of the above

The formula for calculating elasticity of demand is:

• The % change in price over the % change in quantity demanded
• The % change in quantity demanded over the % change in price
• The change in price over the change in quantity demaned
• The change in quantity demanded over the change in price

The elasticity of demand for tissues is 0.66. This means the demand for tissues is

• elastic
• unit elastic
• inelastic
• really expensive

suppose a product's elasticity of demand is 1.7. How responsive is the quantity demanded to a change in price?

• not responsive
• relatively responsive
• negatively responsive
• all of the above

which of the following is not a determinant of demand elasticity?

• availability of substitutes
• share of consumer's budget spend on good
• duration of adjustment period
• government spending