#1
Which of the following measures the responsiveness of quantity demanded to a change in price?
Price elasticity of demand
ExplanationPrice elasticity of demand measures responsiveness of quantity demanded to price changes.
#2
If the price elasticity of demand for a good is greater than 1, it is considered to be:
Elastic
ExplanationPrice elasticity greater than 1 indicates elastic demand.
#3
Which of the following formulas represents price elasticity of demand?
Percentage change in quantity demanded / Percentage change in price
ExplanationPrice elasticity of demand formula: Percentage change in quantity demanded divided by percentage change in price.
#4
If the cross elasticity of demand between two goods is positive, it indicates that the goods are:
Substitutes
ExplanationPositive cross elasticity indicates goods are substitutes.
#5
What does a price elasticity of 0 indicate?
Perfectly inelastic demand
ExplanationPrice elasticity of 0 indicates perfectly inelastic demand.
#6
When demand is perfectly elastic, the price elasticity of demand is equal to:
Infinity
ExplanationPrice elasticity is infinite in perfectly elastic demand.
#7
Which of the following factors does NOT influence the price elasticity of demand?
Income level of consumers
ExplanationIncome level does not influence price elasticity of demand.
#8
Which of the following is true when demand is perfectly inelastic?
Quantity demanded does not change with a change in price
ExplanationIn perfectly inelastic demand, quantity demanded remains constant with price change.
#9
What is the relationship between price elasticity of demand and total revenue?
They have an inverse relationship
ExplanationPrice elasticity of demand and total revenue have an inverse relationship.
#10
What does it mean when the price elasticity of supply is perfectly elastic?
Supply is infinitely responsive to price changes
ExplanationPerfectly elastic supply means it is infinitely responsive to price changes.
#11
When the price elasticity of supply is greater than 1, supply is considered to be:
Elastic
ExplanationSupply is elastic when elasticity is greater than 1.
#12
If the price elasticity of supply is less than 1, supply is considered to be:
Inelastic
ExplanationSupply is inelastic when elasticity is less than 1.
#13
If the price elasticity of demand is 0.5, what type of demand does it represent?
Inelastic demand
ExplanationPrice elasticity of 0.5 indicates inelastic demand.
#14
If the price elasticity of supply is greater than 1, what type of supply curve does it represent?
Perfectly elastic
ExplanationElastic supply with elasticity greater than 1 represents a perfectly elastic supply curve.
#15
If the price elasticity of demand is -1.5, what type of demand does it represent?
Elastic demand
ExplanationPrice elasticity of -1.5 indicates elastic demand.