#1
Which of the following best defines price elasticity of demand?
A measure of how much the quantity demanded of a good responds to a change in the price of that good.
A measure of how much the quantity supplied of a good responds to a change in the price of that good.
A measure of how much consumers' income changes in response to a change in price.
A measure of how much firms' output changes in response to a change in price.
#2
What does a perfectly elastic demand curve look like?
A horizontal line.
A vertical line.
An upward sloping line.
A downward sloping line.
#3
What is the formula for calculating price elasticity of demand?
Percentage change in quantity demanded / Percentage change in price
Percentage change in price / Percentage change in quantity demanded
Absolute change in quantity demanded / Absolute change in price
Absolute change in price / Absolute change in quantity demanded
#4
If the price elasticity of demand for a good is greater than 1, the demand is considered:
Perfectly inelastic
Inelastic
Elastic
Perfectly elastic
#5
Which of the following is a characteristic of goods with elastic demand?
Small change in price leads to a large change in quantity demanded.
Large change in price leads to a small change in quantity demanded.
Quantity demanded does not change regardless of price.
Price and quantity demanded change in the same proportion.
#6
If a good has perfectly elastic demand, what does this imply about the price elasticity of demand?
It is zero.
It is infinity.
It is one.
It is greater than one.
#7
If the price of a good increases by 10% and the quantity demanded decreases by 15%, what is the price elasticity of demand?
#8
Which of the following goods is likely to have the most inelastic demand?
Luxury cars
Generic prescription drugs
Salt
Smartphones
#9
Which factor does NOT influence the price elasticity of demand?
Availability of substitutes
Time period considered
Price of the good relative to income
Advertising expenses
#10
If a 5% increase in the price of a good leads to a 2% decrease in quantity demanded, what is the price elasticity of demand?
#11
Which of the following is true for a linear demand curve?
It is always perfectly elastic.
It is always perfectly inelastic.
It has a constant slope throughout.
It is a horizontal line.
#12
If the price elasticity of demand is less than 1, the demand is considered:
Perfectly inelastic
Inelastic
Elastic
Perfectly elastic
#13
When demand is perfectly inelastic, what is the value of price elasticity of demand?
#14
What does it mean when the price elasticity of demand is zero?
Demand is perfectly elastic.
Demand is perfectly inelastic.
Demand is unit elastic.
Demand is neither elastic nor inelastic.
#15
Which of the following is not a determinant of price elasticity of demand?
Availability of substitutes
Income level
Necessity of the good
Advertising
#16
What is the price elasticity of demand if a 5% increase in price leads to a 3% decrease in quantity demanded?
#17
What does it mean when the price elasticity of demand is less than 1 but greater than 0?
Demand is perfectly inelastic.
Demand is inelastic.
Demand is elastic.
Demand is unitary elastic.