#1
What does price elasticity of demand measure?
The change in quantity demanded in response to a change in price
ExplanationMeasures 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
ExplanationDemand is responsive to price changes
#3
What is the formula for calculating price elasticity of demand?
Percentage change in quantity demanded / Percentage change in price
ExplanationElasticity formula: % change in quantity / % change in price
#4
Which of the following factors does NOT affect the price elasticity of demand?
Income level of consumers
ExplanationIncome level is not a determinant of elasticity
#5
If the price of a good increases by 10% and the quantity demanded decreases by 20%, what is the price elasticity of demand?
2
ExplanationElasticity = % change in quantity / % change in price = 20% / 10% = 2
#6
What does a price elasticity of demand of -0.5 indicate?
Relatively inelastic demand
ExplanationInelasticity with a negative sign indicates inverse relationship
#7
Which of the following is NOT a determinant of price elasticity of demand?
Price of complementary goods
ExplanationComplementary goods' prices do not directly affect elasticity
#8
In which scenario is demand likely to be most elastic?
Generic brand of bottled water
ExplanationGeneric water likely has substitutes, making demand elastic
#9
Which of the following statements is true regarding perfectly elastic demand?
The demand curve is horizontal
ExplanationPerfectly elastic demand means any price change leads to quantity demanded change
#10
In the long run, demand tends to be more elastic because:
Consumers have more time to adjust their behavior
ExplanationLonger time frames allow consumers to adapt to price changes
#11
What is the value of price elasticity of demand when demand is perfectly inelastic?
0
ExplanationPerfectly inelastic demand has zero elasticity