WorksheetsPrice Elasticity of Demand Worksheet
Total questions: 16
Worksheet time: 8mins
Price elasticity of demand measures how much the quantity demanded of a good changes in response to a change in consumer income.
True
False
If a significant change in the price of a good leads to only a small change in the quantity demanded, the good is considered inelastic.
True
False
The formula for calculating the price elasticity of demand is: (Percentage Change in Quantity Demanded) / (Percentage Change in Price).
True
False
Goods with many close substitutes tend to have a more inelastic demand.
True
False
If the price of gasoline increases by 20% and the quantity demanded decreases by 5%, the price elasticity of demand for gasoline is:
4
0.25
-4
-0.25
Which of the following is the best example of an inelastic good?
Pizza
Movie tickets
Prescription medication
Designer clothing
Which of the following factors tends to make the demand for a good more elastic?
The good is a necessity.
There are few available substitutes.
The good represents a small portion of a consumer's budget.
Consumers have a longer time to adjust to a price change.
If the price elasticity of demand for a product is greater than 1, the demand is said to be:
Perfectly inelastic
Inelastic
Unit elastic
Elastic
A local bakery raises the price of its cupcakes by 10%. As a result, the number of cupcakes sold decreases by 30%. The price elasticity of demand for these cupcakes is:
0.33
3
-0.33
-3
Which of the following goods is most likely to have an inelastic demand?
A specific brand of cereal
A new video game
Electricity
A particular model of smartphone
The demand for salt is generally considered to be inelastic because:
it is a necessity and has few substitutes.
it is a luxury good with many alternatives.
its price changes frequently, affecting demand.
consumers can easily stop using it.
An example of an elastic good and the reason its demand is likely to be elastic is:
A luxury car, because consumers can easily delay the purchase if prices rise.
Table salt, because it is a necessity for most households.
Insulin, because it is essential for diabetics.
Tap water, because it is required for daily use.
If a clothing store lowers the price of its t-shirts by 15% and the quantity of t-shirts sold increases by 45%, what is the price elasticity of demand for these t-shirts?
3.0
0.33
1.5
-3.0
Two factors, other than the availability of substitutes, that can influence whether the demand for a good is elastic or inelastic are:
Proportion of income spent on the good and time period considered
Brand popularity and advertising budget
Government regulations and weather conditions
Production cost and number of sellers
The demand for a specific popular coffee brand might be elastic, while the overall demand for coffee is relatively inelastic because:
Consumers can easily switch to other brands if the price of one brand increases, but may not reduce overall coffee consumption.
All coffee brands are equally preferred, so price changes do not affect demand.
The overall demand for coffee is always elastic regardless of brand.
Consumers will stop drinking coffee entirely if one brand becomes expensive.
Fill in the blank: For many people, ______ is a daily necessity or a habit with fewer close substitutes in their daily routine.
coffee
toothpaste
shampoo
socks
