What is price elasticity of demand?

• The responsiveness of demand to changes in income

• The responsiveness of demand to price changes

• The responsiveness of supply to price changes

• The slope of the demand curve

Price elasticity of demand is typically...

• Positive

• Negative

• Zero

• Undefined

What formula is used to calculate price elasticity of demand?

• % change in quantity demanded / % change in price

• % change in price / % change in quantity demanded

• Total revenue / price

• Price / quantity

When using the midpoint method, the denominator is the...

• New price and quantity

• Average of old and new price and quantity

• Only the old price and quantity

• Percentage change in revenue

If the price of a good rises from $10 to $15 and quantity falls from 100 to 80 units, what is the elasticity (midpoint method)?

• 0.2

• 0.5

• 0.9

• 1.2

If PED > 1, demand is:

• Inelastic

• Unit elastic

• Elastic

• Perfectly elastic

If PED = 1, demand is:

• Inelastic

• Unit elastic

• Elastic

• Perfectly elastic

Perfectly inelastic demand means:

• PED = 0

• PED = 1

• PED = ∞

• PED = -1

Which of the following has elastic demand?

• Insulin

• Salt

• Airline tickets for vacations

• Water

Which good is most likely to have inelastic demand?

• Designer handbags

• Smartphones

• Bread

• Movie tickets