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WorksheetsPrice Elasticity of Demand Quiz
Total questions: 51
Worksheet time: 26mins
What is price elasticity of demand?
The responsiveness of demand to changes in income
The responsiveness of demand to price changes
The responsiveness of supply to price changes
The slope of the demand curve
Price elasticity of demand is typically...
Positive
Negative
Zero
Undefined
What formula is used to calculate price elasticity of demand?
% change in quantity demanded / % change in price
% change in price / % change in quantity demanded
Total revenue / price
Price / quantity
When using the midpoint method, the denominator is the...
New price and quantity
Average of old and new price and quantity
Only the old price and quantity
Percentage change in revenue
If the price of a good rises from $10 to $15 and quantity falls from 100 to 80 units, what is the elasticity (midpoint method)?
0.2
0.5
0.9
1.2
If PED > 1, demand is:
Inelastic
Unit elastic
Elastic
Perfectly elastic
If PED = 1, demand is:
Inelastic
Unit elastic
Elastic
Perfectly elastic
Perfectly inelastic demand means:
PED = 0
PED = 1
PED = ∞
PED = -1
Which of the following has elastic demand?
Insulin
Salt
Airline tickets for vacations
Water
Which good is most likely to have inelastic demand?
Designer handbags
Smartphones
Bread
Movie tickets
Which factor increases the elasticity of demand?
Few substitutes
Short time period
Many substitutes
Necessity
Demand is more elastic when the good is:
A necessity
A luxury
Inexpensive
Scarce
Time affects elasticity because:
People are more responsive in the long run
People ignore price in the short term
Time reduces substitutes
Time increases needs
A product with no close substitutes has:
Perfectly elastic demand
Inelastic demand
Unit elastic demand
Elastic demand
Luxury goods have:
Perfectly inelastic demand
Inelastic demand
Elastic demand
No demand
The more narrowly defined a good is, the more likely it is to be:
Inelastic
Elastic
Unit elastic
Nonresponsive
Elasticity is a measure of:
Slope of the curve
Responsiveness
Necessity
Revenue
If price increases and total revenue decreases, demand is:
Inelastic
Unit elastic
Elastic
Perfectly inelastic
If demand is inelastic, a price increase will:
Increase total revenue
Decrease total revenue
Keep revenue constant
Make quantity rise
Demand tends to be more elastic when a good:
Has few substitutes
Is a necessity
Has many substitutes
Has a steep curve
Total revenue =
Price × Cost
Price - Cost
Price × Quantity
Quantity - Price
If demand is elastic, increasing price will:
Increase revenue
Not affect revenue
Decrease revenue
Have no effect
If demand is inelastic, increasing price will:
Decrease revenue
Increase revenue
Keep revenue constant
Reduce cost
With unit elasticity, changing price will:
Increase revenue
Decrease revenue
Not change revenue
Increase cost
With unit elasticity, changing price will:
Increase revenue
Decrease revenue
Not change revenue
Increase cost
If price falls and total revenue rises, demand is:
Inelastic
Elastic
Unit elastic
Perfectly inelastic
Demand is unit elastic when:
%ΔQ = %ΔP
%ΔQ > %ΔP
%ΔP > %ΔQ
PED = 0
Total revenue changes depending on:
Elasticity of supply
Elasticity of demand
Income elasticity
Cross-price elasticity
Elastic demand means TR and price move in:
Same direction
Opposite directions
No direction
Parallel
Inelastic demand means price and TR move in:
Same direction
Opposite direction
Unrelated
Constant
Total revenue is maximized when:
Demand is inelastic
Demand is elastic
Demand is unit elastic
Price is zero
Cross-price elasticity measures how quantity demanded of a good responds to:
A change in its own price
A change in income
A change in the price of another good
A change in supply
Cross-price elasticity formula:
%ΔQx / %ΔPy
%ΔPy / %ΔQx
%ΔQx / %ΔPx
%ΔQ / %ΔIncome
Positive cross-price elasticity implies goods are:
Complements
Substitutes
Unrelated
Inferior
Negative cross-price elasticity implies goods are:
Substitutes
Inferior
Complements
Elastic
Income elasticity of demand measures response of quantity demanded to changes in:
Price of a related good
Own price
Income
Supply
If income elasticity > 0, the good is:
Inferior
Normal
Luxury
Substitute
If income elasticity < 0, the good is:
Normal
Luxury
Inferior
Complement
Luxury goods have income elasticity:
> 1
< 0
= 0
= -1
Normal goods have income elasticity:
Less than 0
Between 0 and 1
Greater than 0
Equal to 0
Cross-price elasticity for unrelated goods is:
Zero
Infinite
Positive
Negative
Price elasticity of supply measures:
Responsiveness of demand to price
Responsiveness of supply to price
Total cost changes
Revenue generated
Formula for price elasticity of supply:
%ΔQd / %ΔP
%ΔQs / %ΔP
%ΔTR / %ΔQ
%ΔP / %ΔQs
If PES > 1, supply is:
Inelastic
Elastic
Perfectly elastic
Unit elastic
Perfectly inelastic supply means PES =
0
1
∞
-1
Perfectly elastic supply means PES =
0
1
∞
-1
Supply tends to be more elastic in the:
Short run
Long run
Momentary period
Recession
If quantity supplied responds slightly to price changes, supply is:
Elastic
Inelastic
Perfectly elastic
Unit elastic
PES of 1.0 means supply is:
Perfectly inelastic
Unit elastic
Elastic
Inelastic
Main determinant of PES is:
Availability of substitutes
Time
Income
Revenue
The steeper the supply curve, the more:
Elastic
Inelastic
Unit elastic
Constant
