Quiz on Price Elasticity of Demand and Supply

What is the price elasticity of demand?

• A measure of how much quantity demanded changes with price changes

• A measure of how much quantity supplied changes with price changes

• A measure of total revenue generated from sales

• A measure of consumer income changes

If the price of a latte rises from $3 to $5, what is the percentage change in price?

• 100 percent

• 40 percent

• 66.67 percent

• 50 percent

What does it mean if demand is elastic?

• Demand is perfectly inelastic

• Total revenue increases with price increases

• Quantity demanded remains constant with price changes

• Quantity demanded changes significantly with price changes

What is the midpoint method used for?

• Calculating average price

• Calculating percentage change in price

• Calculating total revenue

• Calculating elasticity of demand

What is the formula for price elasticity of demand?

• Percentage change in price / Percentage change in quantity demanded

• Percentage change in quantity demanded / Percentage change in price

• Total revenue / Quantity sold

• Price change / Quantity change

What happens to total revenue if demand is inelastic and price increases?

• Total revenue decreases

• Total revenue remains unchanged

• Total revenue increases

• Total revenue fluctuates

What is cross elasticity of demand?

• The change in total revenue due to price changes

• The change in demand due to a change in income

• The change in demand due to a change in the price of a substitute or complement

• The change in supply due to a change in price

What characterizes perfectly inelastic demand?

• Quantity demanded changes significantly with price changes

• Quantity demanded remains constant regardless of price changes

• Demand is unit elastic

• Demand is highly responsive to price changes

What influences the price elasticity of demand?

• Availability of substitutes and proportion of income spent

• Total revenue and consumer preferences

• Production costs and market competition

• Government regulations and taxes

If the price elasticity of supply is less than 1, what does it indicate?

• Supply is elastic

• Supply is unit elastic

• Supply is perfectly elastic

• Supply is inelastic