The responsiveness of quantity demanded to a change in price
The percentage change in quantity demanded divided by the percentage change in income
The percentage change in price divided by the percentage change in quantity demanded
The total revenue earned by a firm
#2
Which of the following is an example of a perfectly elastic good?
Bottled water during a drought
Luxury sports cars
Generic prescription drugs
Rare collectible items
#3
Which of the following factors does NOT affect the price elasticity of demand?
The availability of substitutes
The time horizon
The number of buyers in the market
The level of advertising expenses
#4
What is the formula for calculating price elasticity of demand?
Percentage change in quantity demanded / Percentage change in price
Percentage change in price / Percentage change in quantity demanded
Total revenue / Quantity demanded
Quantity demanded / Total revenue
#5
Which of the following is an example of a product with inelastic demand?
Airline tickets during peak holiday season
Movie tickets on a regular weekday
Generic over-the-counter painkillers
Fancy designer clothing
#6
If the price of a product increases by 20% and the quantity demanded decreases by 10%, what is the price elasticity of demand?
2
0.5
1
1.5
#7
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
2
0.05
1.5
#8
Which of the following statements is true regarding perfectly elastic demand?
The price elasticity of demand is zero
The quantity demanded is infinite at a particular price
The demand curve is horizontal
The demand curve is vertical
#9
If the cross-price elasticity of demand between two goods is negative, what does it indicate about their relationship?
They are substitute goods
They are complementary goods
They are unrelated goods
They are inferior goods
#10
What is the income elasticity of demand for a normal good?
Greater than 1
Less than 1
Equal to 1
Zero
#11
If a 10% increase in the price of good X leads to a 15% decrease in the quantity demanded of good Y, what is the cross-price elasticity of demand between X and Y?