WorksheetsPrice Elasticity of Demand Quiz
Total questions: 8
Worksheet time: 4mins
What does the law of demand state?
If the price of a product falls, the demand will fall.
If the price of a product falls, the demand will stay the same.
If the price of a product increases, the demand will fall.
If the price of a product increases, the demand will increase.
What is price elasticity of demand (PED) measuring?
The change in quality due to price changes.
The change in production cost due to price changes.
The change in supply due to price changes.
The responsiveness of demand to changes in price.
What is the formula for calculating PED?
Percentage change in price divided by percentage change in quantity demanded.
Percentage change in quantity demanded divided by percentage change in price.
Percentage change in demand divided by percentage change in supply.
Percentage change in supply divided by percentage change in demand.
If a business reduces its prices by 10% and the quantity demanded increases by 40%, what is the PED?
-0.25
0.25
4
-4
What does a PED value greater than 1 indicate?
Perfectly inelastic demand
Elastic demand
Unitary elastic demand
Inelastic demand
If prices increase by 20% and the quantity demanded falls by 4%, what is the PED?
-0.2
0.2
-5
5
What happens to revenue if a business with elastic demand increases its prices?
Revenue will double.
Revenue will stay the same.
Revenue will fall.
Revenue will increase.
What happens to revenue if a business with inelastic demand reduces its prices?
Revenue will stay the same.
Revenue will fall.
Revenue will increase.
Revenue will double.
