WorksheetsPrice Elasticity of Demand (PED)
Total questions: 13
Worksheet time: 14mins
Demand is said to be price elastic when ______________ and price inelastic when ______________.
PED > 0 / PED < 0
PED < 0 / PED > 0
PED > 1 / PED < 1
PED < 1 / PED > 1
The PED of a straight-line demand curve with a negative slope
is constant throughout the range of the demand curve
decreases throughout as P falls
increases throughout as P falls
at first increases, reaches a maximum, and then begins to decrease
If a good is a necessity, its PED value will be
less than one
equal to one
greater than one but less than infinity
infinity
If a good’s percentage change in quantity demanded is equal to its change in price, the PED value will be
less than one
equal to one
greater than one
zero
If a good has many close substitutes, the PED value for that good is likely to be
less than one
equal to one
greater than one
zero
If a good takes up a large percentage of one’s income, the PED for that good is likely to be
less than one
greater than one but less than infinity
zero
infinity
If quantity demanded for a good is completely unresponsive to a change in price, the PED for that good will be
infinity
equal to one
greater than one but less than infinity
zero
If a decision to buy a good must be made very quickly, the PED value for that good is likely to be
greater than one but less than infinity
equal to one
less than one
infinity
If PED for a good is less than one, then
total revenue will fall if the price falls
total revenue will fall if the price increases
total revenue will rise if the price falls
total revenue will not change if the price rises or falls
If PED for a good is greater than one, then
total revenue will fall if the price falls
total revenue will rise if the price increases
total revenue will rise if the price falls
total revenue will not change if the price rises or falls
If PED for a good is equal to one, then
total revenue will fall if the price falls
total revenue will rise if the price increases
total revenue will rise if the price falls
total revenue will not change if the price rises or falls
An increase in the price of potatoes from $4.00 to $4.50 results in a fall in quantity purchased from 10,000 kg to 9000 kg. The price elasticity of demand is
1.25
0.80
0.50
12.5
Price elasticity of demand is given by
the change in quantity demanded divided by the change in price
the percentage change in price divided by the percentage change in quantity demanded
the percentage change in quantity demanded divided by the percentage change in price
the change in demand divided by the percentage change in price
