Price Elasticity of Demand Quiz

What does the price elasticity of demand measure?

• Market equilibrium

• Quantity supplied

• Responsiveness of quantity demanded given a change in price

• Supply responsiveness

In the equation for price elasticity of demand, which goes on the top and which goes on the bottom?

• Price on the top, quantity demanded on the bottom

• Quantity demanded on the top, price on the bottom

• Price on the top, supply on the bottom

• Demand on the top, price on the bottom

What does a negative number for price elasticity of demand indicate?

• Price elastic demand

• Price inelastic demand

• Perfectly price elastic demand

• Perfectly price inelastic demand

When is demand for a good or service more likely to be price elastic?

• When the good is a necessity

• In the short run

• When the percentage of income that a price change takes is smaller

• When there are fewer substitutes available

What shape of demand curve is drawn for price inelastic demand?

• Horizontal

• Vertical

• Shallow

• Steep

What is the key factor that determines whether demand for a good or service is price elastic or price inelastic?

• The number of producers in the market

• The level of advertising for the product

• The number of substitutes available

• The cost of production

In the long run, demand for a good or service is more likely to be:

• Price elastic

• Price inelastic

• Perfectly price elastic

• Perfectly price inelastic

What does the S in 'splat' stand for in determining price elasticity of demand?

• Substitutes

• Supply

• Shortage

• Surplus

Which type of good is more likely to have price inelastic demand?

• Luxury

• Necessity

• Addictive

• Habit-forming

What is the link between price elasticity of demand and total revenue for a business?

• Total revenue is not affected by changes in demand

• Total revenue is only affected by changes in supply

• Price elasticity of demand has a direct impact on total revenue

• There is no link between the two