Price Elasticity of Demand Quiz

What is price elasticity of demand?

• The responsiveness of the quantity demanded for a good or service after a change in the product's own price

• The responsiveness of the quantity supplied for a good or service after a change in the price of a complementary product

• The responsiveness of the quantity demanded for a good or service after a change in the price of a substitute product

• The responsiveness of the quantity supplied for a good or service after a change in the product's own price

What makes demand price elastic?

• A small proportion of income allocated to spending on the good

• A large number of close substitutes in the market

• A high degree of necessity

• A short time period allowed for consumers to respond

Which factor influences demand for a product to be price inelastic?

• A large proportion of income allocated to spending on the good

• A large number of close substitutes in the market

• A long time period allowed for consumers to respond

• A high degree of necessity

What factor may make demand price inelastic for a luxury product?

• A small proportion of income allocated to spending on the good

• A high degree of necessity

• A large number of close substitutes in the market

• A long time period allowed for consumers to respond

Why might demand be price inelastic for a product that takes up a hefty percentage of a consumer's budget?

What factor influences demand to be price sensitive in the immediate aftermath of a price change?

• The degree of necessity

• The proportion of income allocated to spending on the good

• The number of close substitutes in the market

• The time period allowed for consumers to respond

What makes demand price inelastic for a product subject to habitual consumption?

• The number of close substitutes in the market

• The method of payment

• The time period allowed for consumers to respond

• The degree of necessity

Why might demand be more price inelastic during peak times?

• Because peak times typically have higher demand

• Because the degree of necessity is high

• Because the time period allowed for consumers to respond is short

• Because there are a large number of close substitutes in the market

What factor influences demand to be price sensitive during off-peak times?

• The degree of necessity

• The time period allowed for consumers to respond

• The number of close substitutes in the market

• The peak and off-peak demand

Why might demand be price inelastic for broadly defined goods or services?

• Because the degree of necessity is high

• Because there are a large number of close substitutes in the market

• Because the time period allowed for consumers to respond is short

• Because the breadth of definition makes the demand inelastic