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WorksheetsPED Quiz
Total questions: 15
Worksheet time: 8mins
Price elasticity of demand is given by
a the change in quantity demanded divided by the change in price
b the percentage change in price divided by the percentage change in quantity demanded
c the percentage change in quantity demanded divided by the percentage change in price
d the change in demand divided by the percentage change in price
Demand is said to be price elastic when ______________ and price inelastic when ______________.
a PED > 0 / PED < 0
b PED < 0 / PED > 0
c PED > 1 / PED < 1
d PED < 1 / PED > 1
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’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 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 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
Suppose that the PED for socks is 0.7. If the price of socks is reduced by 10% how will sales be effected?
Sales will grow by more 10%
sales will decrease by less than 10%
sales will grow by more than 10%
sales will grow by less than 10%
How does elasticity affect potential revenue for a firm?
If demand for a good is inelastic, lowering the price could raise revenue.
If demand for a good is inelastic, raising the price could reduce revenue.
If demand for a good is elastic, raising the price must increase revenue.
If demand for a good is elastic, raising the price could reduce revenue.
The price elasticity of demand for the vertical demand curve is
unitary elastic
perfectly elastic
inelastic
perfectly inelastic
The demand for Cheerios cereal is more price-elastic than the demand for cereals as a whole. This is best explained by the fact that:
Cheerios are a luxury
there are more substitutes for Cheerios than for cereals as a whole
cereals are a necessity
consumption of cereals as a whole is greater than consumption of Cheerios
The price elasticity of demand for a textbook is estimated to be 1 no matter what the price or quantity demanded. In this case,
a 10 percent increase in price will result in a 10 percent increase in the quantity demanded
an increase in price will decrease the total revenue of sellers
a decrease in price will increase the total revenue of sellers
a 10 percent increase in price will result in a 10 percent decrease in the quantity demanded
Which of the following two goods is more likely to be inelastically demanded?
Demand for insulin
Demand for vitamins
