Microconomics PED JPE

1. What is price elasticity of demand (PED)?

• A measure of supply responsiveness
• A measure of how much quantity demanded changes with price
• A measure of market competition
• A measure of government regulation

2. Which formula represents the price elasticity of demand (PED)?

• (Change in Quantity Demanded / Change in Price)
• (Change in Price / Change in Quantity Demanded)
• (Total Revenue / Quantity Demanded)
• (Price / Quantity)

3. When demand is perfectly elastic, what is the value of PED?

• 0
• 1
• Infinite (∞)
• -1

4. When demand is perfectly inelastic, what is the value of PED?

• 0
• 1
• Infinite (∞)
• -1

5. Which of the following describes elastic demand?

• Consumers are very responsive to price changes
• Consumers are not responsive to price changes
• Demand does not change with price
• Demand only responds to income changes

6. Inelastic demand means that

• Consumers are very responsive to price changes
• Consumers are not responsive to price changes
• Demand does not change with price
• Demand only responds to income changes

7. What is the relationship between PED and total revenue when demand is elastic?

• Total revenue increases as price increases
• Total revenue remains constant as price changes
• Total revenue decreases as price increases
• Total revenue is zero

8. If PED is greater than 1, demand is considered

• Elastic
• Inelastic
• Unitary
• Perfectly elastic

9. If PED is less than 1 but greater than 0, demand is considered

• Elastic
• Inelastic
• Unitary
• Perfectly elastic

10. If PED is equal to 1, demand is considered

• Elastic
• Inelastic
• Unitary
• Perfectly elastic