#1
What does the price elasticity of demand measure?
The percentage change in price divided by the percentage change in quantity demanded
ExplanationSensitivity of quantity demanded to a change in price.
#2
Which of the following is an example of a perfectly elastic good?
Generic prescription drugs
ExplanationGoods where quantity demanded changes infinitely with any change in price.
#3
Which of the following factors does NOT affect the price elasticity of demand?
The level of advertising expenses
ExplanationFactors affecting how much quantity demanded changes with a change in price.
#4
What is the formula for calculating price elasticity of demand?
Percentage change in quantity demanded / Percentage change in price
ExplanationSimple ratio to measure the responsiveness of quantity demanded to a change in price.
#5
Which of the following is an example of a product with inelastic demand?
Generic over-the-counter painkillers
ExplanationProducts with demand that changes relatively little with a change in price.
#6
If the price of a product increases by 20% and the quantity demanded decreases by 10%, what is the price elasticity of demand?
0.5
ExplanationPrice elasticity of demand formula: (Percentage change in quantity demanded) / (Percentage change in price).
#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
ExplanationPrice elasticity of demand formula: (Percentage change in quantity demanded) / (Percentage change in price).
#8
Which of the following statements is true regarding perfectly elastic demand?
The quantity demanded is infinite at a particular price
ExplanationDemand where any price increase leads to zero quantity demanded.
#9
If the cross-price elasticity of demand between two goods is negative, what does it indicate about their relationship?
They are complementary goods
ExplanationGoods where an increase in the price of one leads to an increase in demand for the other.
#10
What is the income elasticity of demand for a normal good?
Greater than 1
ExplanationGoods where demand increases more than proportionately to a rise in income.
#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?
0.67
ExplanationCross-price elasticity formula: (Percentage change in quantity demanded of Y) / (Percentage change in price of X).