Price Elasticity

Price elasticity of demand is given by

• the change in quantity demanded divided by the change in price

• the percentage change in price divided by the percentage change in quantity demanded

• the percentage change in quantity demanded divided by the percentage change in price

• the change in demand divided by the percentage change in price

Meaning of Elasticity of Supply by Alfred Marshal.

• change in quantity supplied of a commodity in response to change in its price.

• the amount of the change in the quantity demanded of a commodity in response to change in its price.

Demand is almost always more elastic at higher prices and less elastic at lower prices.

• True

• False

The formula for calculating elasticity of demand is:

• The % change in price over the % change in quantity demanded

• The % change in quantity demanded over the % change in price

• The change in price over the change in quantity demaned

• The change in quantity demanded over the change in price

What does it mean?

• Perfectly inelastic demand

• Inelastic demand

• Unitarily elastic demand

• Elastic demand

• Perfectly elastic demand

What does it mean?

% change in Qd = % change in P

• Perfectly inelastic demand

• Inelastic demand

• Unitarily elastic demand

• Elastic demand

• Perfectly elastic demand

Suppose that elasticity of demand of socks is 0.7.  If the price of socks is reduced by 10%, how will sales be effected?

• sales will grow by more than 10%

• Sales will grow by 10%

• Sales will grow by less than 10%

• Sales will decrease by 10%

Which of the following best describes price elasticity of demand?

• The change in quantity demanded divided by the change in price

• The percentage change in price divided by the percentage change in quantity demanded

• The percentage change in quantity demanded divided by the percentage change in price

• The change in demand divided by the percentage change in price

What is the meaning of elasticity of supply according to Alfred Marshall?

• Change in quantity supplied of a commodity in response to change in its price

• The amount of the change in the quantity demanded of a commodity in response to change in its price

• The change in price divided by the change in quantity supplied

• The percentage change in quantity supplied divided by the percentage change in price

Demand is almost always more elastic at higher prices and less elastic at lower prices. Is this statement true or false?

• True

• False