Price Elasticity of Demand

What is the formula for price elasticity of demand?

• (Percentage change in quantity demanded) / (Percentage change in price)
• (Percentage change in price) / (Percentage change in quantity demanded)
• (Change in quantity demanded) / (Change in price)
• (Change in price) / (Change in quantity demanded)

If the price elasticity of demand is greater than 1, the good is considered:

• Elastic
• Inelastic
• Unitary elastic
• Perfectly elastic

A price increase of 10% leads to a 5% decrease in quantity demanded. What is the price elasticity of demand?

• 0.5
• 2
• 1
• 0.2

When demand is perfectly inelastic, the price elasticity of demand is:

• 0
• 1
• 5
• Infinity

If the price elasticity of demand for a good is -0.8, the demand is:

• Elastic
• Inelastic
• Unitary elastic
• Perfectly elastic

If the price elasticity of demand is -1.5, a 10% increase in price will result in a:

• 15% increase in quantity demanded
• 15% decrease in quantity demanded
• 10% increase in quantity demanded
• 10% decrease in quantity demanded

The concept of perfectly inelastic demand implies that:

• Consumers are highly responsive to price changes
• Quantity demanded does not respond to price changes
• Demand is perfectly elastic
• The demand curve is a straight line

When calculating the percentage change in quantity demanded, which of the following is the correct formula?

• ((New quantity demanded - Old quantity demanded) / Old quantity demanded) * 100
• ((Old quantity demanded - New quantity demanded) / New quantity demanded) * 100
• ((New quantity demanded - Old quantity demanded) / ((New quantity demanded + Old quantity demanded) / 2)) * 100
• (New quantity demanded - Old quantity demanded) / 100

If the price elasticity of demand is -0.2, a 5% increase in price will result in a:

• 1% increase in quantity demanded
• 1% decrease in quantity demanded
• 5% increase in quantity demanded
• 5% decrease in quantity demanded

Which of the following goods is likely to have the most elastic demand?

• Bread

• Omega Watch

• Own brand food products

• Crude Oil