Elasticity

What does price elasticity of demand measure?

• The degree of responsiveness of quantity demanded to changes in price

• The degree of responsiveness of quantity supplied to changes in price

• The degree of responsiveness of quantity demanded to changes in income

• The degree of responsiveness of quantity supplied to changes in income

What is the degrees of responsiveness if the value for price elasticity of demand for Good A is 1.75?

• Perfectly inelastic

• Inelastic

• Unitary elastic

• Elastic

What factor influence the price elasticity of demand?

• Mobility and availability of resources

• Proportion of income spent on a product

• Level of technology

• All of the above

What does income elasticity of demand measure?

• The degree of responsiveness of quantity demanded to changes in price

• The degree of responsiveness of quantity supplied to changes in price

• The degree of responsiveness of quantity demanded to changes in income

• The degree of responsiveness of quantity supplied to changes in income

If Daniel's income rises from RM1,000 to RM1,600, his demand for Good X increases from 30 units to 65 units per month and the income elasticity of demand for Good X is approximately 1.9441. What type of good is Good X?

• Normal good

• Inferior good

• Luxury good

• Necessity

The quantity demanded for Good A was 300 units when the price for Good B was USD3.50, and this month the price for Good B increased to USD5 and the quantity demanded for Good A decreased to 75 units.

The cross-elasticity of demand is -1.75. What is the relationship between the two goods?

• Independent

• Substitute

• Complementary

• Not related

What factor influence the price elasticity of supply?

• Level of income 

• Availability of substitutes

• Surplus capacity

• All of the above

What is the degrees of responsiveness if the value for price elasticity of supply for Good A is 1.176?

• Perfectly inelastic

• Inelastic

• Unitary elastic

• Elastic

What is the relationship between Goods A and B if the cross-elasticity of demand is positive?

• Complement

• Independent / Not related

• Substitute

• Cannot be determined

What is the importance of income elasticity?

• Determine the types of market

• Promotional strategy

• Forecasting current demand

• All of the above