Elasticity of Demand Quiz

What does elasticity of demand measure?

• The slope of the demand curve

• The responsiveness of Qd to changes in a determinant

• The difference between supply and demand

• The total revenue earned by producers

If PED = 0, demand is:

• Perfectly elastic

• Elastic

• Perfectly inelastic

• Unit elastic

A PED greater than 1 means demand is:

• Inelastic

• Unit elastic

• Elastic

• Perfectly elastic

Which of the following tends to increase PED?

• Fewer substitutes

• Short time horizon

• Narrow definition of the good

• Small proportion of income spent on good

Which of these products is most likely to have elastic demand?

• Salt

• Gasoline

• Designer handbags

• Insulin

The “TR Test” shows that when demand is elastic:

• Price ↑ → TR ↑

• Price ↑ → TR ↓

• Price ↓ → TR ↓

• TR never changes

The slope of the demand curve is constant, but elasticity:

• Is constant everywhere

• Changes along the curve

• Does not exist

• Equals the slope

On a straight-line demand curve, the top half is:

• Elastic

• Inelastic

• Unit elastic

• Perfectly elastic

Which determinant makes demand more elastic?

• More substitutes

• Higher necessity

• Shorter time period

• Smaller income proportion

Governments often tax goods with:

• High PED

• Unit PED

• Low PED

• Negative YED