#1
In economics, what does the term 'elasticity' measure?
The responsiveness of quantity demanded to changes in price
The total quantity of goods produced
The amount of profit generated by a firm
The level of government intervention in the market
#2
What is the formula to calculate price elasticity of demand (Ed)?
Ed = (ΔQ/ΔP) * (P/Q)
Ed = (ΔQ/ΔP) * (Q/P)
Ed = (ΔP/ΔQ) * (Q/P)
Ed = (ΔP/ΔQ) * (P/Q)
#3
What is the primary determinant of the price elasticity of demand?
The price of the product
The income level of consumers
The availability of substitutes
The cost of production
#4
What does a price elasticity of demand (Ed) value of 0 indicate?
Demand is perfectly inelastic
Demand is perfectly elastic
Demand is unitary elastic
Demand is inelastic
#5
What does it mean when the price elasticity of demand is greater than 1?
Demand is elastic
Demand is inelastic
Demand is unitary elastic
Demand is perfectly elastic
#6
Which of the following indicates perfectly inelastic demand?
Ed = 1
Ed = 0
Ed = ∞
Ed = -1
#7
What does a price elasticity of demand (Ed) value of -2 indicate?
Demand is inelastic
Demand is perfectly elastic
Demand is unitary elastic
Demand is elastic
#8
Which of the following represents perfectly elastic demand?
A straight line with a slope of -1
A horizontal demand curve
A vertical demand curve
A curve with infinite elasticity
#9
What does a price elasticity of supply (Es) value of 0.5 indicate?
Supply is perfectly inelastic
Supply is elastic
Supply is unitary elastic
Supply is perfectly elastic
#10
Which of the following is a characteristic of perfectly elastic demand?
The demand curve is horizontal
The demand curve is vertical
The demand curve is downward sloping
The demand curve is upward sloping
#11
If the price of a good increases by 10% and the quantity demanded decreases by 15%, what is the price elasticity of demand (Ed)?
#12
When is the price elasticity of supply (Es) likely to be greater than 1?
In the short run for durable goods
In the long run for perishable goods
In the short run for perishable goods
In the long run for durable goods
#13
Which of the following factors influences the price elasticity of demand?
Availability of close substitutes
Income level of consumers
Size of the firm
Government regulations
#14
When might a product exhibit perfectly inelastic supply?
When there are no available substitutes
When the production process is highly flexible
When the production process is highly automated
When the demand for the product is highly volatile
#15
What is the relationship between price elasticity of demand and total revenue?
They have an inverse relationship
They have a direct relationship
They are unrelated
They are directly proportional
#16
What happens to total revenue when demand is elastic and price increases?
Total revenue decreases
Total revenue remains constant
Total revenue increases
Total revenue fluctuates randomly
#17
What does a price elasticity of supply (Es) value of 1 indicate?
Supply is perfectly inelastic
Supply is perfectly elastic
Supply is unitary elastic
Supply is inelastic