Price Elasticity of Demand Quiz

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

• elastic

• unit elastic

• inelastic

• really expensive

Elasticity refers to

• how producers of goods and services react to price changes

• how consumers of goods and services react to price changes

• how far a supply of scarce goods can be stretched

• how often the price of a good or service changes when quantity demanded changes

Water has seen an increase in demand 8% this summer, while the price has decreased 12%. What is the PED?

• - 1.5 inelastic

• - 1.5 elastic

• - 0.67 inelastic

• - 0.67 elastic

Wheat has seen a decrease in demand of 5%, while the price has increased 7%. What is the PED?

• - 1.4 inelastic

• - 1.4 elastic

• - 0.71 inelastic

• - 0.71 elastic

Define Price Elasticity of Demand

• PED measures the degree of responsiveness of price of a good to a change in quantity demanded of a good, ceteris paribus

• PED measures the degree of responsiveness of demand of a food to a change in its price, ceteris paribus

• PED measures the degree of responsiveness of quantity demanded of a good to a change in its price, ceteris paribus

• PED measures the degree of responsiveness of price of a good to a change in demand of a good, ceteris paribus

Because of the law of demand, PED is always

• Negative

• Zero

• Positive

• Infinite

If PED of a good is - 0.4, we say that demand for the good is

• Price elastic

• Perfectly price elastic

• Unitary price elastic

• Price inelastic

If a good has only a few substitutes and these substitutes are not close to the good, the PED for the good is likely to be

• Perfectly Price Inelastic

• Price Inelastic

• Perfectly Price Elastic

• Price Elastic

Ford Trucks have seen a increase in demand of 27%, while the price has decreased 15%, what is the PED?

• - 0.56 inelastic

• - 0.56 elastic

• - 1.8 inelastic

• - 1.8 elastic

Demand is unit elastic if it is less than 1.0

• True
• False