#1
2. If the Price Elasticity of Demand is greater than 1, the demand is considered:
Elastic
ExplanationDemand is sensitive to price changes
#2
1. What is Price Elasticity of Demand?
A measure of how much the quantity demanded of a good responds to changes in price
ExplanationResponsiveness of quantity demanded to price changes
#3
3. Which of the following is NOT a determinant of Price Elasticity of Demand?
Consumer income
ExplanationNot a factor affecting elasticity
#4
5. How is the Price Elasticity of Demand calculated?
Percentage change in quantity demanded divided by percentage change in price
ExplanationFormula for calculating elasticity
#5
7. If the cross-price elasticity between two goods is positive, it indicates that they are:
Substitutes
ExplanationRelated goods with substitutable demand
#6
10. How does the time horizon affect the Price Elasticity of Demand?
Shorter time horizon makes demand more elastic
ExplanationElasticity increases with shorter timeframes
#7
4. If a good has no close substitutes, its elasticity of demand is likely to be:
Inelastic
ExplanationDemand is less sensitive to price changes
#8
6. Which of the following goods is likely to have a more elastic demand?
Luxury goods
ExplanationDemand sensitive to price for luxury items
#9
8. In the case of perfectly elastic demand, the Price Elasticity of Demand is equal to:
Infinity
ExplanationExtreme elasticity where quantity demanded changes infinitely
#10
9. If the demand for a good is perfectly inelastic, what is the Price Elasticity of Demand?
0
ExplanationDemand does not change with price
#11
11. What is the relationship between total revenue and price elasticity of demand?
Total revenue is always maximized at a unitary elastic point
ExplanationOptimal revenue point with unit elasticity