Font size
WorksheetsElasticity (PED/PES/YED/XPED)
Total questions: 30
Worksheet time: 17mins
A demand curve for a product shows the relationship between its price and
cost of production
population changes
the income of the consumer
the quantity of the product consumed
A firm produces a good with a price elasticity of demand greater than 1. What must the firm experience if there is a fall in the price of this good?
a decrease in costs
a decrease in sales
an increase in revenue
an increase in profits
What could cause the demand for a product to become more price-elastic?
a smaller proportion of income being spent on the product
more substitutes coming onto the market
the product becoming more of a necessity
the product falling in price
When the price of a product rises from $10 to $15, the demand falls from 5000 to 4000 units. What is the value of the price elasticity of demand for the product?
0.2
0.4
1.5
2.5
The price elasticity of demand for Japanese video-recorders on sale in Germany is price-elastic. Which statement will therefore be true?
A tariff will keep all the Japanese video-recorders out of Germany.
German manufacturers cannot compete in the video-recorder market.
Japanese manufacturers’ profits will decrease if the price is reduced.
Japanese manufacturers’ revenue from sales will increase if the price is reduced.
When a price of a good doubles the demand falls by more than half, and the revenue received by the seller falls. What does this suggest about the good?
It has substitutes.
It is a necessity.
It is perfectly elastic in demand.
It is in fixed supply.
What can be concluded from the demand curve for the product shown in the diagram?
Price increases will raise the producers’ revenue.
Producers are unable to respond to a price rise.
The product is one with many substitutes.
There are 20 people able to buy the product.
A mobile (cell) phone operator increases the price of making calls on its network. After the price increase, the revenue of the mobile phone operator falls by 10%. What is the price elasticity of demand (PED) for the mobile operator’s service?
elastic
inelastic
perfectly elastic
unit elastic
What can cause the supply curve for a product to shift to the right?
an increase in demand for the product
an increase in government subsidies to producers
an increase in indirect taxes on the product
an increase in the costs of production
What makes the supply of a product more elastic?
It is a necessity and with no substitutes.
It cannot be stored easily and costlier to store.
It can be produced easily in less time.
Altering cost of the product is high.
Which term best describes joint demand?
Complements
Substitutes
What does a positive sign XED represent?
Substitutes
Complements
What does a negative sign XED represent?
Complements
Substitutes
XED with a value more than 1 is best described as?
Cross elastic
Cross inelastic
What XED will unrelated products have?
XED of zero
XED of less than 1
XED of more than 1
When XED < 0 what does this mean for demand and price?
When the price of one good increase, the demand for the other falls
When the price of one good decreases, the demand for the other falls
When the price of one good increase, the demand for the other increases
It will have no affect as the products are unrelated.
When 0 < PED < 1, price demand is _________
Perfectly elastic
Perfectly inelastic
Inelastic
Elastic
Unitary elastic
When 1 < PED < ∞, price demand is _________
Perfectly elastic
Perfectly inelastic
Inelastic
Elastic
Unitary elastic
When PED = 1, price demand is _________
Perfectly elastic
Perfectly inelastic
Inelastic
Elastic
Unitary elastic
When PED = ∞, price demand is __________
Perfectly elastic
Perfectly inelastic
Inelastic
Elastic
Unitary elastic
A 15% increase in income leads to a 10% increase in demand for good A and 20% increase in demand for good B. Which of the two goods is likely to be a luxury good?
Good A
Good B
Supply is price _________when PES < 1.
elastic
inelastic
unitary elastic
perfectly elastic
perfectly inelastic
Determinants of supply include:
length of time
income levels
spare capacity
mobility of factors of production
advertising
Price elasticity of supply is the responsiveness of
demand to a change in price.
price to a change in supply.
quantity supplied to a change in price.
price to a change in supply.
Factory owner Susan has calculated that her PES is 3. This number means that,
if price were to rise by 2% Susan would supply 6% more products.
If price were to rise by 2% Susan would supply 3% more products.
the percentage change in price is three times the percentage change in quantity.
in the PES formula, the top number is smaller than the bottom number.
The PES for wheat in a given country
is less elastic the longer the time period in question.
is more elastic the more substitutes there are for wheat.
is greater the more wheat there is in storage.
will be higher if there are restrictions on wheat imports.
If the supply curve of a product is vertical, PES is equal to
0.
1.
-1.
infinity.
If storage of a good is cheap and readily available, supply is likely to be
relatively elastic.
relatively inelastic.
perfectly inelastic.
perfectly elastic.
