Price Elasticity of Demand Quiz

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

• Inelastic

• Elastic

• Perfectly elastic

• Unitary elastic

The formula for the price elasticity of demand is:

• (% Change in Price) / (% Change in Quantity Demanded)

• (% Change in Quantity Demanded) / (% Change in Price)

• (% Change in Income) / (% Change in Demand)

• (% Change in Demand) / (% Change in Price)

What is the price elasticity of demand if a 5% increase in price leads to a 15% decrease in demand?

• 0.33

• 1.5

• 3.0

• 0.15

Which of the following represents elastic demand?

• PED = 0

• PED < 1

• PED > 1

• PED = 1

If demand is unitary elastic, total revenue will:

• Increase

• Decrease

• Stay the same

• Double

Necessity goods generally have inelastic demand.

• True

• False

Which factor does NOT influence the price elasticity of demand?

• Availability of substitutes

• Proportion of income spent

• Production cost

• Time horizon

Goods with more substitutes typically have more elastic demand.

• True

• False

Which type of goods tend to have elastic demand?

• Necessities

• Addictive goods

• Luxury goods

• Public services

A product is likely to have elastic demand if:

• It is a necessity

• It has many substitutes

• It takes up a small portion of income

• It is habit-forming