Price Elasticity of Demand and supply

Leo runs a lemonade stand and notices that when he lowers the price of a cup of lemonade, more people buy it. This observation is an example of:

• The responsiveness of quantity demanded to a change in price.

• The change in demand when income changes.

• The change in supply when demand changes.

• The responsiveness of supply to a change in price.

Charles and Andy are running a lemonade stand. They notice that when they lower the price of a cup of lemonade, more people buy it. Calculate the price elasticity of demand for their lemonade.

• Price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price.

• Price elasticity of demand is calculated as the percentage change in price divided by the percentage change in quantity demanded.

• Price elasticity of demand is calculated as the percentage change in quantity supplied divided by the percentage change in price.

• Price elasticity of demand is calculated as the percentage change in price divided by the percentage change in quantity supplied.

Chris and Philip are discussing how the price of a product affects its demand. Interpret price elasticity of demand figures.

• Price elasticity of demand measures the responsiveness of quantity demanded to a change in price.

• Price elasticity of demand measures the responsiveness of quantity supplied to a change in price.

• Price elasticity of demand measures the change in price due to a change in quantity demanded.

• Price elasticity of demand measures the change in quantity supplied due to a change in price.

Leo is running a lemonade stand. He notices that when he lowers the price of lemonade, more customers buy it. What is the normal trend of a demand curve?

• Demand curve slopes downward

• Demand curves slopes upwards

• Demand curve slopes Vertically always

• Demand curve slopes horizontally

Charles runs a lemonade stand and wants to understand the relationship between price elasticity of demand and total spending on his lemonade, and the revenue he gains.

• Price elasticity of demand affects total spending and revenue by determining how quantity demanded changes with price changes.

• Price elasticity of demand has no impact on total spending and revenue.

• Total spending and revenue are only affected by production costs, not price elasticity of demand.

• Price elasticity of demand only affects consumer preferences, not spending or revenue.

Rayan, a local farmer, is trying to understand the implications of price elasticity of demand for his agricultural products. The implications for decision making by producers, consumers, and government include:

• Ability to set optimal pricing strategies

• Understanding consumer behavior

• Regulating market conditions

• All of the above

Philip runs a small bakery and notices that the quantity of bread sold is highly responsive to changes in _______. This concept is known as price elasticity of demand (PED).

• price

• income

• supply

• advertising

When Charles noticed that the price of his favorite video game dropped, he bought more copies than he originally planned. What is this an example of?

• When the quantity demanded changes by a smaller percentage than the change in price.

• When the quantity demanded changes by a greater percentage than the change in price.

• When the quantity demanded does not change with the change in price.

Philip noticed that when the price of his favorite snack increased, the quantity he bought changed by a ______ percentage than the change in price. This is an example of inelastic demand.

• smaller

• larger

• equal

• greater

Rayan is planning a flower shop and is trying to decide whether the demand for flowers is likely to be elastic or inelastic. What should he consider?

• Elastic because it is perishable

• Inelastic because it is durable

• Inelastic because it is perishable

• Elastic because it is durable