EconomicsDemand Elasticity
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Price Elasticity of Demand and Demand Curve Analysis Quiz

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#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.
Explanation

Responsiveness of quantity demanded to price change.

#2

What does a perfectly elastic demand curve look like?

A horizontal line.
Explanation

Price change leads to infinite quantity change.

#3

What is the formula for calculating price elasticity of demand?

Percentage change in quantity demanded / Percentage change in price
Explanation

Ratio of quantity and price changes.

#4

If the price elasticity of demand for a good is greater than 1, the demand is considered:

Elastic
Explanation

Sensitive to price changes.

#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.
Explanation

Sensitive to price variations.

#6

If a good has perfectly elastic demand, what does this imply about the price elasticity of demand?

It is infinity.
Explanation

Any change in price causes infinite quantity change.

#7

If the price of a good increases by 10% and the quantity demanded decreases by 15%, what is the price elasticity of demand?

1.67
Explanation

Price and quantity change ratio.

#8

Which of the following goods is likely to have the most inelastic demand?

Salt
Explanation

Essential goods with few substitutes.

#9

Which factor does NOT influence the price elasticity of demand?

Advertising expenses
Explanation

Not directly affecting demand's sensitivity.

#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?

0.5
Explanation

Inelastic demand with low sensitivity.

#11

Which of the following is true for a linear demand curve?

It has a constant slope throughout.
Explanation

Consistent rate of change.

#12

If the price elasticity of demand is less than 1, the demand is considered:

Inelastic
Explanation

Insensitivity to price changes.

#13

When demand is perfectly inelastic, what is the value of price elasticity of demand?

0
Explanation

Quantity remains constant despite price changes.

#14

What does it mean when the price elasticity of demand is zero?

Demand is perfectly inelastic.
Explanation

No change in quantity despite price.

#15

Which of the following is not a determinant of price elasticity of demand?

Advertising
Explanation

Not directly influencing demand sensitivity.

#16

What is the price elasticity of demand if a 5% increase in price leads to a 3% decrease in quantity demanded?

0.6
Explanation

Moderate sensitivity to price changes.

#17

What does it mean when the price elasticity of demand is less than 1 but greater than 0?

Demand is inelastic.
Explanation

Some insensitivity to price changes.

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