#1
Which of the following factors does NOT influence demand elasticity?
Consumer preferences
ExplanationConsumer preferences do not directly affect demand elasticity.
#2
If a small change in price leads to a large change in quantity demanded, what type of demand elasticity is exhibited?
Elastic demand
ExplanationElastic demand is exhibited when a small change in price results in a large change in quantity demanded.
#3
Which of the following statements accurately describes elastic demand?
A small change in price leads to a large change in quantity demanded.
ExplanationElastic demand is characterized by a large change in quantity demanded in response to a small change in price.
#4
Which of the following is an example of a product with elastic demand?
Luxury cars
ExplanationLuxury cars are typically examples of products with elastic demand.
#5
How does the availability of substitutes affect demand elasticity?
More substitutes make demand more elastic
ExplanationThe presence of more substitutes increases the elasticity of demand.
#6
If the price of a good increases by 10% and the quantity demanded decreases by 5%, what is the price elasticity of demand?
0.5
ExplanationThe price elasticity of demand is calculated to be 0.5 in this scenario.
#7
Which of the following would likely have the most inelastic demand?
Cigarettes
ExplanationCigarettes typically have highly inelastic demand.
#8
Which of the following is NOT a determinant of price elasticity of demand?
Advertising expenses
ExplanationAdvertising expenses are not a determinant of price elasticity of demand.
#9
How does the time horizon affect the price elasticity of demand?
Longer time horizons tend to make demand more elastic.
ExplanationDemand tends to become more elastic with longer time horizons.
#10
What is the formula for calculating the price elasticity of demand?
Percentage change in quantity demanded / Percentage change in price
ExplanationPrice elasticity of demand is calculated by dividing the percentage change in quantity demanded by the percentage change in price.
#11
If the price of a product decreases by 20% and the quantity demanded increases by 10%, what is the price elasticity of demand?
1.5
ExplanationThe price elasticity of demand is 1.5 in this scenario.
#12
If the price of a good increases by 10% and the total revenue decreases, what can be said about the demand elasticity?
The demand is elastic
ExplanationThe demand is elastic if an increase in price leads to a decrease in total revenue.
#13
What is the relationship between total revenue and price elasticity of demand in the elastic range?
Total revenue decreases as price decreases.
ExplanationIn the elastic range, total revenue decreases as price decreases.
#14
Which of the following is a determinant of demand elasticity?
The income elasticity of demand
ExplanationThe income elasticity of demand is a determinant of demand elasticity.
#15
What is the formula for calculating the midpoint method of price elasticity of demand?
[(Q2 - Q1) / (Q2 + Q1)] / [(P2 - P1) / (P2 + P1)]
ExplanationThe midpoint method formula for price elasticity of demand involves changes in quantity and price between two points.