Price Elasticity of Demand Quiz

What does PED measure?

• Change in supply with price

• Change in revenue with output

• Responsiveness of demand to income changes

• Responsiveness of quantity demanded to price changes

If PED > 1, demand is:

• Unitary elastic

• Elastic

• Inelastic

• Perfectly inelastic

If PED < 1, demand is considered:

• Elastic

• Perfectly elastic

• Unitary elastic

• Inelastic

If a firm raises price and total revenue increases, demand must be:

• Elastic

• Unitary

• Inelastic

• Perfectly elastic

If a firm lowers price and total revenue increases, demand is:

• Elastic

• Inelastic

• Unitary

• Perfectly inelastic

Total Revenue (TR) is calculated as:

• Price + Quantity

• Cost × Quantity

• Price - Cost

• Price × Quantity

When PED = 1, what happens to total revenue if price changes?

• TR increases

• TR decreases

• TR stays the same

• TR becomes zero

Which of the following has the most inelastic demand?

• Luxury handbag

• Salt

• Movie ticket

• Laptop

A demand curve is most elastic at:

• The midpoint

• The bottom

• The top

• Equilibrium point

If a firm wants to increase revenue with elastic demand, it should:

• Raise price

• Lower price

• Keep price the same

• Increase output