IDENTIFYING THE DEGREE OF PED Quiz

Understanding the concept of PED: What does PED stand for in economics?

• Price Elasticity of Demand

• Public Education Department

• Productivity Enhancement Directive

• Profit Earning Determination

Understanding the concept of PED: Define price elasticity of demand (PED) in your own words.

• PED measures the responsiveness of quantity demanded to a change in price.

• PED measures the impact of advertising on the quantity demanded.

• PED measures the impact of income on the quantity demanded.

• PED measures the responsiveness of quantity supplied to a change in price.

Calculating the price elasticity of demand: How is the price elasticity of demand calculated?

• By adding the percentage change in quantity demanded to the percentage change in price.

• By multiplying the percentage change in quantity demanded by the percentage change in price.

• By dividing the percentage change in quantity demanded by the percentage change in price.

• By subtracting the percentage change in quantity demanded from the percentage change in price.

Calculating the price elasticity of demand: If the percentage change in quantity demanded is 10% and the percentage change in price is 5%, what is the price elasticity of demand?

• 1

• 2

• 0.5

• 20

Interpreting the degree of PED: If the price elasticity of demand is -0.5, how would you interpret this value?

• Inelastic demand

• Perfectly competitive demand

• Unitary demand

• Elastic demand

Interpreting the degree of PED: What does a price elasticity of demand greater than 1 indicate about the demand for a product?

• Elastic

• Unitary elastic

• Perfectly elastic

• Inelastic

Factors affecting the degree of PED: Name two factors that affect the degree of price elasticity of demand.

• Consumer preferences and advertising

• Market demand and production cost

• Price and quantity

• Income level and availability of substitutes

Factors affecting the degree of PED: How does the availability of substitutes affect the price elasticity of demand?

• Availability of substitutes has no effect on price elasticity of demand

• Availability of substitutes makes the demand perfectly elastic

• Availability of substitutes makes the demand more inelastic

• Availability of substitutes makes the demand more elastic

Graphical representation of PED: Draw a graph to represent a perfectly inelastic demand.

• A curve with a steep slope

• A horizontal line

• A vertical line

• A downward sloping line

Graphical representation of PED: Draw a graph to represent a perfectly elastic demand.

• Vertical line at the quantity axis

• Downward sloping line from left to right

• Upward sloping line from left to right

• Horizontal line at the price axis