ABBE1033 Lecture 4 Elasticity

What does the concept of price elasticity of demand measure?

• The change in quantity demanded due to a change in price
• The change in price due to a change in quantity demanded
• The change in supply due to a change in demand
• The change in demand due to a change in supply

Which of the following is NOT a determinant of price elasticity of demand?

• Availability of substitutes
• Proportion of income spent on the good
• Time period
• Cost of production

How is price elasticity of demand calculated?

• Percentage change in quantity demanded divided by percentage change in price
• Percentage change in price divided by percentage change in quantity demanded
• Percentage change in supply divided by percentage change in demand
• Percentage change in demand divided by percentage change in supply

If a product has a price elasticity of demand greater than 1 and less than infinity, what is it considered?

• Elastic
• Inelastic
• Unitary elastic
• Perfectly elastic

Which factor is most likely to make the demand for a good more elastic?

• Few available substitutes
• A necessity good
• A luxury good
• Short time period

What does the elasticity of supply measure?

• The responsiveness of quantity supplied to a change in price
• The responsiveness of price to a change in quantity supplied
• The responsiveness of demand to a change in supply
• The responsiveness of supply to a change in demand

Which of the following is a determinant of price elasticity of supply?

• Time period for production
• Consumer preferences
• Availability of substitutes
• Proportion of income spent on the good

If the price elasticity of supply is less than 1 and greater than 0, what is the supply considered?

• Inelastic
• Elastic
• Unitary elastic
• Perfectly inelastic

What happens to the price elasticity of demand when there are more substitutes available?

• It becomes more elastic
• It becomes more inelastic
• It remains unchanged
• It becomes perfectly inelastic

Why might a good have a perfectly inelastic demand?

• It is a necessity with no substitutes
• It is a luxury with many substitutes
• It is a good with a short time period