#1
What does the price elasticity of demand measure?
The change in demand due to changes in price
The change in price due to changes in demand
The change in demand due to changes in income
The change in demand due to changes in quantity supplied
#2
If the price elasticity of demand for a good is greater than 1, it indicates that the demand is:
Perfectly elastic
Inelastic
Elastic
Unitary elastic
#3
Which formula represents the price elasticity of demand?
PED = % Change in Quantity Demanded / % Change in Price
PED = % Change in Price / % Change in Quantity Demanded
PED = % Change in Price * % Change in Quantity Demanded
PED = % Change in Quantity Demanded * % Change in Price
#4
If the price elasticity of demand is -2, what happens to total revenue when the price decreases?
Total revenue decreases
Total revenue increases
Total revenue remains constant
Total revenue fluctuates randomly
#5
What does a price elasticity of demand value of zero indicate?
Perfectly elastic demand
Perfectly inelastic demand
Unitary elastic demand
No change in quantity demanded with a change in price
#6
What does it mean if the price elasticity of demand is perfectly inelastic?
Demand does not respond to price changes
Demand is very sensitive to price changes
Demand changes proportionally to price changes
Demand changes more than proportionally to price changes
#7
Which factor does not affect the price elasticity of demand?
Availability of substitutes
Time horizon
Income level
Type of good (necessity vs. luxury)
#8
What is the price elasticity of demand for a perfectly elastic demand curve?
#9
How does time horizon affect price elasticity of demand?
Shorter time horizons make demand more elastic
Shorter time horizons make demand more inelastic
Longer time horizons make demand more elastic
Time horizon does not affect price elasticity of demand
#10
When is the demand for a good considered perfectly elastic?
When the price elasticity of demand is greater than 1
When the price elasticity of demand is equal to 1
When the price elasticity of demand is less than 1
When the price elasticity of demand approaches infinity
#11
If the price elasticity of demand is -0.5, the demand is:
Inelastic
Perfectly elastic
Unitary elastic
Elastic
#12
If the cross-price elasticity of demand between two goods is negative, what does it indicate about their relationship?
They are complements
They are substitutes
They are unrelated
There is no relationship between them
#13
What does it mean if the price elasticity of demand is greater than 1 but less than infinity?
Demand is perfectly elastic
Demand is inelastic
Demand is elastic but not perfectly elastic
Demand is unitary elastic
#14
If the price elasticity of demand is 0.5, what happens to total revenue when the price increases?
Total revenue decreases
Total revenue increases
Total revenue remains constant
Total revenue fluctuates randomly
#15
What does it mean if the price elasticity of demand is less than 1 but greater than 0?
Demand is perfectly inelastic
Demand is inelastic but not perfectly inelastic
Demand is perfectly elastic
Demand is unitary elastic