3B.2

Which method uses a tangent to the demand curve to find elasticity at a specific point?

• Ratio Method

• Total Expenditure Method

• Point (Geometric) Method

• Percentage Method

On a linear demand curve, what is the elasticity at point A (where the curve meets the price axis)?

• ∞ (Perfectly elastic)

• 0 (Perfectly inelastic)

• 1 (Unitary elastic)

• Depends on the product

Who developed the all the method of measuring price elasticity of demand?

• Prof. Keynes

• Prof. Marshall

• Prof. Smith

• Prof. Ricardo

What is another name for the Ratio Method?

• Total expenditure method

• Point elasticity method

• Geometric method

• Arithmetic method

In the Total Expenditure Method, what does total expenditure mean?

• Percentage change in price

• Price multiplied by quantity demanded

• Price plus quantity

• Price minus quantity

If total spending increases when price decreases, what type of elasticity is it?

• Inelastic demand

• Unit elastic demand

• Elastic demand

• Perfectly inelastic demand

What is the correct formula for measuring price elasticity of demand using the Point Method?

• Ed = % change in demand ÷ % change in price

• Ed = Lower segment of demand curve ÷ Upper segment of demand curve

• Ed = Price × Quantity

• Ed = Total expenditure before ÷ Total expenditure after

Which demand curve is convex to origin

• Linear

• Non linear

• Both

• None

Ratio method help to calculate elasticity at each point

• True

• False

• Both

• None

What does the total expenditure method focus on?

• Relationship between income and price

• Total cost of production

• Change in consumer spending when price changes

• Profit made by producers