Quiz on Elasticity of Demand and Supply

What does the Law of Demand state?

• As price increases, quantity demanded decreases.

• As price increases, quantity demanded increases.

• As price decreases, quantity demanded decreases.

• Price and quantity demanded are unrelated.

What is meant by elastic demand?

• Quantity demanded changes significantly with price changes.

• Quantity demanded changes little with price changes.

• Quantity demanded is unaffected by consumer preferences.

• Quantity demanded remains constant regardless of price.

What is unitary elasticity?

• A change in price results in a proportionate change in quantity demanded.

• A small price change leads to a large change in quantity demanded.

• A change in price results in no change in quantity demanded.

• A large price change leads to no change in quantity demanded.

Which of the following is an example of inelastic demand?

• High-end electronics.

• Luxury cars.

• Life-saving medicines.

• Designer handbags.

What does a perfectly elastic demand curve look like?

• A vertical line.

• A horizontal line.

• A downward sloping line.

• An upward sloping line.

If the price of a product increases and the quantity demanded decreases significantly, what type of demand is this?

• Inelastic demand.

• Unitary elastic demand.

• Elastic demand.

• Perfectly inelastic demand.

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

• Quantity Demanded / Total Revenue.

• Percentage Change in Quantity Demanded / Percentage Change in Price.

• Total Revenue / Quantity Demanded.

• Percentage Change in Price / Percentage Change in Quantity Demanded.

Which of the following factors can make demand more elastic?

• Lack of consumer awareness.

• Time constraints.

• Necessity of the good.

• Availability of substitutes.

What does negative cross elasticity indicate?

• Goods are inferior.

• Goods are unrelated.

• Goods are complements.

• Goods are substitutes.

What is the implication of inelastic supply for producers?

• They can increase prices without affecting quantity supplied.

• They must lower prices to increase quantity supplied.

• They cannot change prices at all.

• They will always have excess supply.