Price Elasticity of Demand Quiz

The price elasticity of demand is a measure of the:

• Steepness or slope of a demand curve

• Absolute changes in quantity demanded and price

• Responsiveness of quantity demanded to a change in price

• Sensitivity of the quantity demanded for one good to a change in the price of another good

If the price elasticity of demand for a good is .75, the demand for the good can be described as:

• Normal

• Elastic

• Inferior

• Inelastic

The basic formula for the price elasticity of demand coefficient is:

• absolute decline in quantity demanded/absolute increase in price.

• percentage change in quantity demanded/percentage change in price.

• absolute decline in price/absolute increase in quantity demanded.

• percentage change in price/percentage change in quantity demanded.

A perfectly inelastic demand schedule:

• rises upward and to the right, but has a constant slope.

• can be represented by a line parallel to the vertical axis.

• cannot be shown on a two-dimensional graph.

• can be represented by a line parallel to the horizontal axis.

The larger the coefficient of price elasticity of demand for a product, the:

• larger the resulting price change for an increase in supply.

• more rapid the rate at which the marginal utility of that product diminishes.

• less competitive will be the industry supplying that product.

• smaller the resulting price change for an increase in supply.

The price elasticity of demand is generally:

• negative, but the minus sign is ignored.

• positive, but the plus sign is ignored.

• positive for normal goods and negative for inferior goods.

• positive because price and quantity demanded are inversely related.

If a demand for a product is elastic, the value of the price elasticity coefficient is:

• zero.

• greater than one.

• equal to one.

• less than one.

The concept of price elasticity of demand measures:

• the slope of the demand curve.

• the number of buyers in a market.

• the extent to which the demand curve shifts as the result of a price decline.

• the sensitivity of consumer purchases to price changes.

The more time consumers have to adjust to a change in price:

• the smaller will be the price elasticity of demand.

• the greater will be the price elasticity of demand.

• the more likely the product is a normal good.

• the more likely the product is an inferior good.

Price elasticity of demand is generally:

• greater in the long run than in the short run.

• greater in the short run than in the long run.

• the same in both the short run and the long run.

• greater for 'necessities' than it is for 'luxuries'.