Understanding Price Elasticity of Demand Quiz

What does Price Elasticity of Demand measure?

• The quantity of a good supplied to the market

• The responsiveness of quantity demanded to a change in price

• The change in price due to a change in technology

• The amount of money a company makes

If the Price Elasticity of Demand is greater than 1, how is the demand described?

• Inelastic

• Unitary elastic

• Perfectly inelastic

• Elastic

What type of Price Elasticity of Demand indicates that a product's demand does not change with price?

• Elastic

• Inelastic

• Perfectly inelastic

• Perfectly elastic

If a small change in price leads to a large change in quantity demanded, the demand is said to be:

• Perfectly inelastic

• Inelastic

• Elastic

• Perfectly elastic

Which of the following is a characteristic of a perfectly elastic demand?

• Consumers will buy a fixed quantity regardless of price.

• Consumers will only buy at one price, and no sales occur if the price changes.

• Consumers are somewhat sensitive to price changes.

• Consumers are not sensitive to price changes at all.

In the context of Price Elasticity of Demand, what does a value of 0 indicate?

• The demand is perfectly elastic.

• The demand is elastic.

• The demand is inelastic.

• The demand is perfectly inelastic.

What happens to total revenue when the price of an inelastic good is increased?

• It decreases.

• It stays the same.

• It increases.

• It first increases, then decreases.