Short Revision on PED

What are the determinants of price elasticity of demand?

• availability of substitutes, proportion of income spent on the good, time period considered, and necessity of the good

• population size, weather conditions, technological advancements, and market competition

• brand loyalty, consumer income, production costs, and market demand

• price of the good, consumer preferences, advertising, and government regulations

How is price elasticity of demand calculated?

• Total revenue divided by quantity demanded

• Percentage change in price divided by percentage change in quantity demanded

• Percentage change in quantity demanded divided by percentage change in price

• Percentage change in quantity supplied divided by percentage change in price

If the price of a product increases by 10% and the quantity demanded decreases by 5%, what is the price elasticity of demand?

• -0.5

• -1

• 1.5

• 0.5

What does it mean if the price elasticity of demand is greater than 1?

• The demand for the product is unitary elastic.

• The price of the product is too high.

• The demand for the product is elastic.

• The demand for the product is inelastic.

If the price elasticity of demand for a product is -0.5, how will a 10% increase in price affect the quantity demanded?

• 10% decrease in quantity demanded

• 5% decrease in quantity demanded

• 10% increase in quantity demanded

• No change in quantity demanded

How does price elasticity of demand affect total revenue?

• Price elasticity of demand affects total revenue based on the elasticity value.

• Price elasticity of demand decreases total revenue.

• Price elasticity of demand increases total revenue.

• Price elasticity of demand has no effect on total revenue.

If the price elasticity of demand for a product is -2, what will happen to total revenue if the price is increased?

• Total revenue will fluctuate.

• Total revenue will remain the same.

• Total revenue will increase.

• Total revenue will decrease.