Price Elasticity and Market Dynamics Quiz
Test your knowledge on price elasticity of demand, cross-price elasticity, income elasticity, and market dynamics with this comprehensive quiz.
#1
Which of the following best describes price elasticity of demand?
A measure of how much quantity demanded responds to a change in price.
A measure of how much quantity supplied responds to a change in price.
A measure of how much consumer income changes in response to a change in price.
A measure of how much consumer preferences change in response to a change in price.
#2
If a product has an elastic demand, what does it mean?
Consumers are not very responsive to changes in price.
Consumers are highly responsive to changes in price.
The quantity demanded does not change with price changes.
The quantity supplied matches the quantity demanded perfectly.
#3
What is the formula to calculate price elasticity of demand?
Percentage change in quantity demanded divided by percentage change in price.
Percentage change in price divided by percentage change in quantity demanded.
Change in quantity demanded multiplied by change in price.
Change in price divided by change in quantity demanded.
#4
If a good has a price elasticity of demand of -2, what does it indicate?
Demand is elastic.
Demand is inelastic.
Demand is unit elastic.
Demand is perfectly elastic.
#5
Which of the following factors affects the price elasticity of demand?
Availability of substitutes.
Income level of consumers.
Time horizon considered.
All of the above.
#6
What does it mean if the price elasticity of demand is greater than 1?
Demand is inelastic.
Demand is elastic.
Demand is perfectly inelastic.
Demand is perfectly elastic.
#7
What is the formula for calculating income elasticity of demand?
Percentage change in quantity demanded divided by percentage change in income.
Percentage change in income divided by percentage change in quantity demanded.
Change in quantity demanded multiplied by change in income.
Change in income divided by change in quantity demanded.
#8
What does it mean if the cross-price elasticity of two goods is positive?
They are substitutes.
They are complements.
The goods are unrelated.
The goods are inferior.
#9
What is the relationship between price elasticity of demand and total revenue?
They are always inversely related.
They are always directly related.
They are unrelated.
It depends on the elasticity of demand.
#10
If a good has a negative cross-price elasticity with another good, what does it mean?
They are substitutes.
They are complements.
The goods are unrelated.
The goods are inferior.
#11
If a product has a perfectly inelastic demand, what is its price elasticity of demand?
#12
What does a negative income elasticity of demand indicate?
The good is a necessity.
The good is an inferior good.
The good is a luxury.
The good is a normal good.
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