#1
2. If the price elasticity of demand for a good is greater than 1, it is considered:
Elastic
ExplanationGoods with elasticity greater than 1 are responsive to price changes.
#2
10. The concept of elasticity is primarily concerned with the:
Proportionate response of quantity demanded to a change in price
ExplanationFocuses on the proportional change in quantity demanded relative to price.
#3
15. If the price of a good increases by 10% and the quantity demanded decreases by 5%, the price elasticity of demand is:
0.5
ExplanationCalculated as the percentage change in quantity demanded divided by the percentage change in price.
#4
1. What is price elasticity of demand?
A measure of how sensitive quantity demanded is to a change in price
ExplanationQuantifies the responsiveness of quantity demanded to price changes.
#5
3. Which of the following factors affects the price elasticity of demand?
Availability of substitutes
ExplanationThe presence of substitutes influences demand elasticity.
#6
6. The midpoint formula for calculating the price elasticity of demand is useful because it:
Gives a more accurate measure of elasticity
ExplanationProvides a balanced approach for elasticity calculation.
#7
8. In the case of inelastic demand, a price increase will result in:
An increase in total revenue
ExplanationTotal revenue rises when price and demand move inversely.
#8
11. If the demand for a good is inelastic, a decrease in price will result in:
An increase in total revenue
ExplanationInelastic demand leads to higher total revenue when prices drop.
#9
4. Cross-price elasticity measures the responsiveness of the quantity demanded of one good to a change in the price of:
A substitute good
ExplanationIndicates how demand for one good reacts to price changes in a substitute.
#10
5. If a good has perfectly inelastic demand, the price elasticity of demand is equal to:
0
ExplanationQuantity demanded remains constant regardless of price changes.
#11
7. If the demand for a good is perfectly elastic, the price elasticity of demand is equal to:
Infinity
ExplanationConsumers are willing to buy any quantity at the current price.
#12
9. If the cross-price elasticity of two goods is negative, they are likely:
Complementary goods
ExplanationNegative cross-price elasticity indicates goods are complements.
#13
12. The concept of perfectly inelastic demand implies that consumers:
Will only buy a fixed quantity regardless of the price
ExplanationConsumers buy a constant quantity irrespective of price changes.