Price Elasticity of Demand and Its Determinants Quiz
Test your knowledge on price elasticity with these econometrics quiz questions. Explore determinants, calculations, and effects on total revenue.
#1
2. If the Price Elasticity of Demand is greater than 1, the demand is considered:
Inelastic
Elastic
Perfectly elastic
Unitary elastic
#2
1. What is Price Elasticity of Demand?
A measure of how much the quantity demanded of a good responds to changes in price
A measure of the total revenue generated by a good
A measure of consumer preferences for a good
A measure of the production cost of a good
#3
3. Which of the following is NOT a determinant of Price Elasticity of Demand?
Availability of substitutes
Necessity of the good
Time horizon
Consumer income
#4
5. How is the Price Elasticity of Demand calculated?
Percentage change in quantity demanded divided by percentage change in price
Total revenue divided by quantity demanded
Price multiplied by quantity demanded
Percentage change in price divided by percentage change in quantity demanded
#5
7. If the cross-price elasticity between two goods is positive, it indicates that they are:
Substitutes
Complements
Normal goods
Inferior goods
#6
10. How does the time horizon affect the Price Elasticity of Demand?
Shorter time horizon makes demand more elastic
Shorter time horizon makes demand more inelastic
Time horizon has no effect on elasticity
Time horizon makes demand perfectly elastic
#7
4. If a good has no close substitutes, its elasticity of demand is likely to be:
Elastic
Inelastic
Perfectly elastic
Unitary elastic
#8
6. Which of the following goods is likely to have a more elastic demand?
Luxury goods
Necessity goods
Inferior goods
Complementary goods
#9
8. In the case of perfectly elastic demand, the Price Elasticity of Demand is equal to:
#10
9. If the demand for a good is perfectly inelastic, what is the Price Elasticity of Demand?
#11
11. What is the relationship between total revenue and price elasticity of demand?
Total revenue is always maximized at an elastic point
Total revenue is always maximized at an inelastic point
Total revenue is always maximized at a unitary elastic point
Total revenue is not affected by price elasticity
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