Elasticity of Demand and Supply Quiz

What do elasticity of demand and elasticity of supply measure in economics?

• The speed of production

• The responsiveness of quantity demanded and quantity supplied to changes in price

• The quality of goods

• The cost of production

Why are elasticity of demand and elasticity of supply important?

• They help us understand the speed of production

• They help us understand the quality of goods

• They help us understand how sensitive the behavior of consumers and producers is to changes in various variables

• They help us understand the cost of production

What does the term "Price elasticity of demand" refer to?

• The percentage change in the quantity demanded divided by the percentage change in a variable (such as price or income)

• The total quantity of goods sold in a market

• The fixed cost of producing a good

• The total revenue generated from sales

Which of the following is a variable that can affect the price elasticity of demand?

• Quantity of goods produced

• Price or income

• Total revenue

• Fixed costs

What is elastic demand?

• When the percentage change in quantity demanded is greater than the percentage change in price.

• When the percentage change in quantity demanded is less than the percentage change in price.

• When the percentage change in quantity demanded is equal to the percentage change in price.

• When the percentage change in quantity demanded is not related to the percentage change in price.

How do consumers respond to price changes in the case of elastic demand?

• They are highly responsive to price changes.

• They are relatively insensitive to price changes.

• They do not respond to price changes.

• They respond to price changes only when the price decreases.

What is inelastic demand?

• When the percentage change in quantity demanded is less than the percentage change in price.

• When the percentage change in quantity demanded is greater than the percentage change in price.

• When the percentage change in quantity demanded is equal to the percentage change in price.

• When the percentage change in quantity demanded is not related to the percentage change in price.

How do consumers respond to price changes in the case of inelastic demand?

• They are relatively insensitive to price changes.

• They are highly responsive to price changes.

• They do not respond to price changes.

• They respond to price changes only when the price decreases.

What is unitary elastic demand?

• When the percentage change in quantity demanded is equal to the percentage change in price.

• When the percentage change in quantity demanded is greater than the percentage change in price.

• When the percentage change in quantity demanded is less than the percentage change in price.

• When the percentage change in quantity demanded is not related to the percentage change in price.

What happens to total expenditure on the product in the case of unitary elastic demand when the price changes?

• It remains constant.

• It increases.

• It decreases.

• It fluctuates randomly.