Elasticities Quiz

What does Price Elasticity of Demand (PED) measure?

• Responsiveness of quantity supplied to changes in price

• Responsiveness of quantity demanded to changes in price

• Responsiveness of price to changes in quantity

• Responsiveness of income to changes in demand

If the PED is greater than 1, what type of demand is it?

• Price inelastic demand

• Price elastic demand

• Perfectly inelastic demand

• Unit elastic demand

What happens to total revenue (TR) when price decreases and demand is elastic?

• TR decreases

• TR remains unchanged

• TR fluctuates

• TR increases

What is the formula for calculating Price Elasticity of Demand (PED)?

• PED = %∆ Qx + %∆ Px

• PED = Qx / Px

• PED = %∆ Px / %∆ Qx

• PED = %∆ Qx / %∆ Px

What does a PED value of 0 indicate?

• Perfectly elastic demand

• Perfectly inelastic demand

• Price elastic demand

• Unit elastic demand

Which of the following is a determinant of Price Elasticity of Demand?

• Number and closeness of substitutes

• Cost of production

• Government regulations

• Market competition

What does a negative Income Elasticity of Demand (YED) indicate?

• Inferior good

• Luxury good

• Necessity

• Normal good

What is the formula for calculating Income Elasticity of Demand (YED)?

• YED = Qx / Y

• YED = % ∆Qx + % ∆Y

• YED = % ∆Y / % ∆Qx

• YED = % ∆Qx / % ∆Y

What does a YED value greater than 1 indicate?

• Normal goods

• Luxury goods

• Necessities

• Inferior goods

What is the relationship between PED and total revenue when demand is unit elastic?

• TR fluctuates with price changes

• No effect on TR with price change

• TR decreases with price increase

• TR increases with price decrease