Elasticity Quiz

Price Elasticity of Demand measures the degree of responsiveness of a change in ___________________ due to a change in price

• quantity

• quantity demanded

• demand

• output

Answer explanation

Price affects quantity demanded/quantity supplied.

For PED, we want to assess how consumers will react to a change in price

Which is the formula for calculating PED?

• % change in Qd / % change in price

• % change in price / % change in Qd

• % change in Demand/ % change in Qd

• % change in Demand / % change in price

Answer explanation

Price affects quantity demanded/quantity supplied.

For PED, we want to assess how consumers will react to a change in price

When PED is more than 1, we say that demand for the good is

• unitary price elastic

• perfectly price elastic

• price elastic

• price inelastic

Answer explanation

Price affects quantity demanded/quantity supplied.

For PED, we want to assess how consumers will react to a change in price

When a good has more substitutes, the demand for the good tends to be more price elastic. True or False?

• True

• False

When the proportion of income spent on a good is high, we say that the demand for a good is price elastic. True or False?

• True

• False

Price Elasticity of Supply is always negative! True or False?

• True

• False

Which of the following factors will cause the supply of a good to be price inelastic? Can choose more than 1 factor

• Long gestation period

• Limited capacity to increase production

• The price of the good

• Degree of necessity

Manchester United is the best club in the world! Do you agree?

• Yes!!!!!!!!

• No!!