Demand Elasticity Quiz

The price elasticity of demand is a measure of

• the responsiveness of the quantity demanded to price changes.

• the quantity demanded at a given price.

• the shift in the demand curve when price changes.

• the demand for a product holding price constant.

The elasticity of demand for a product is likely to be greater

• the smaller the number of substitute products available.

• the smaller the proportion of one's income spent on the product.

• the larger the number of substitute products available.

• if the product is an imported good rather than a domestically produced good.

If OPEC increases its price of oil, and still the demand for oil decreases by a very small amount, we can conclude that the demand for oil is

• relatively elastic.

• relatively inelastic.

• perfectly elastic.

• perfectly inelastic.

If the consumption of sugar does not change at all following a price increase from 50 cents per pound to 65 cents per pound, the demand for sugar is considered to be

• relatively inelastic.

• perfectly elastic.

• perfectly inelastic.

• unitary elastic.

If the demand for a product is said to be relatively inelastic, the 'absolute' value of the elasticity coefficient will be

• less than one.

• greater than one.

• equal to one.

• zero.

If an item has several good substitutes, the demand curve for that item is likely to be

• relatively inelastic.

• relatively elastic.

• perfectly inelastic.

• unit elastic.

Remembering that demand elasticity is defined as the percentage change in quantity divided by the percentage change in price, if price decreases and, in percentage terms, quantity rises more than price has dropped, total revenue will

• increase.

• decrease.

• remain the same.

• either increase or decrease.

Suppose the price of beans rises from $1.00 a pound to $2.00 a pound, quantity demanded falls from 10 units to 6 units, the coefficient of elasticity of demand for beans using the arc elasticity approach is

• -1.33.

• -0.75.

• -0.4.

• -0.25.

Suppose the price of beans rises from $1.00 a pound to $2.00 a pound, quantity demanded falls from 10 units to 6 units. In this example, the demand for beans is said to be

• relatively elastic.

• relatively inelastic.

• perfectly elastic.

• perfectly inelastic.

A perfectly elastic demand curve

• can be represented by a line parallel to the vertical axis.

• is a 45-degree line.

• can be represented by a line parallel to the horizontal axis.

• cannot be represented on a two-dimensional graph.