Price Elasticity and Demand Characteristics Quiz

Price elasticity of demand measures responsiveness of quantity demanded to price changes.

Gasoline exhibits perfectly inelastic demand as its consumption remains unchanged regardless of price variations.

Price elasticity of demand is calculated by dividing the percentage change in quantity demanded by the percentage change in price.

The price elasticity of demand is -0.67, indicating inelastic demand where a percentage change in price leads to a proportionately smaller change in quantity demanded.

The midpoint formula for price elasticity of demand calculates elasticity by considering the average of starting and ending values.

A price elasticity of demand of 1 indicates unitary elastic demand, where a percentage change in price results in an equal percentage change in quantity demanded.

Price elasticity of demand is infinite when demand is perfectly elastic, indicating any change in price results in an infinite change in quantity demanded.

A price elasticity of demand of -0.5 indicates inelastic demand, meaning a percentage change in price results in a proportionately smaller change in quantity demanded.

Price elasticity of demand is 2, indicating that quantity demanded is highly responsive to price changes.

A price elasticity of demand of zero indicates perfectly inelastic demand, where quantity demanded remains constant regardless of price changes.

A positive cross-price elasticity of demand suggests that the goods are substitutes, meaning an increase in the price of one leads to an increase in demand for the other.

Bottled water is likely to have relatively elastic demand as it has substitutes and consumers can easily switch to other beverages.

When demand is inelastic, a price increase leads to a proportionately smaller decrease in quantity demanded, resulting in total revenue increase.

Gasoline is likely to have perfectly inelastic demand as its consumption remains constant despite changes in price.

Various factors including availability of substitutes, necessity, and time affect the price elasticity of demand.

Perfectly elastic demand means any change in price results in an infinite change in quantity demanded, thus represented by a horizontal demand curve.

When a good constitutes a small portion of the buyer's budget, consumers are more sensitive to price changes, making demand more elastic.

Unitary elastic demand means the price elasticity of demand equals 1, indicating proportionate changes in quantity demanded to changes in price.

Perfectly inelastic demand is characterized by a vertical demand curve, where quantity demanded remains constant regardless of price changes.