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What is the definition of elasticity in economics?
What is the definition of elasticity in economics?
- The total amount of a good or service that is available for purchase in the market
- The value of a good or service in terms of its usefulness or satisfaction to consumers
- The profit made by a company after selling a good or service
- The extent to which the quantity demanded or supplied of a particular good or service changes in response to a change in its price or income (correct)
What is Price Elasticity of Demand measuring?
What is Price Elasticity of Demand measuring?
- How responsive consumers are to changes in prices of a good or service (correct)
- How responsive producers are to changes in prices of a good or service
- How responsive producers are to changes in their costs
- How responsive consumers are to changes in their income
If a 10% increase in price leads to a 20% decrease in quantity demanded, what is the price elasticity of demand?
If a 10% increase in price leads to a 20% decrease in quantity demanded, what is the price elasticity of demand?
- 5
- 2 (correct)
- 1
- 0.5
What does a negative cross-price elasticity of demand between two goods indicate?
What does a negative cross-price elasticity of demand between two goods indicate?
What are the three main determinants of price elasticity of demand?
What are the three main determinants of price elasticity of demand?
What can be concluded about two goods with a cross-price elasticity of demand of 1.8?
What can be concluded about two goods with a cross-price elasticity of demand of 1.8?
What is the formula for calculating income elasticity of demand?
What is the formula for calculating income elasticity of demand?
What type of elasticity would be calculated if we wanted to know how responsive the quantity supplied is to changes in price?
What type of elasticity would be calculated if we wanted to know how responsive the quantity supplied is to changes in price?
An increase in the number of close substitutes for a product will result in which of the following?
An increase in the number of close substitutes for a product will result in which of the following?
If the income elasticity of demand for a good is 0.5, what will happen to the demand for the good if there is a 10% increase in income?
If the income elasticity of demand for a good is 0.5, what will happen to the demand for the good if there is a 10% increase in income?
A company, ABC, differentiates its personal computers from those of other firms through effective advertising and unique features. This will result in which of the following?
A company, ABC, differentiates its personal computers from those of other firms through effective advertising and unique features. This will result in which of the following?
Two goods, A and B, have the same price elasticity of supply. However, the cost of producing extra units increases more rapidly for good A than for good B. Which of the following is true?
Two goods, A and B, have the same price elasticity of supply. However, the cost of producing extra units increases more rapidly for good A than for good B. Which of the following is true?
Good A is a normal good with an income elasticity of 0.8. What will happen to the demand for good A if there is a 10% decrease in income?
Good A is a normal good with an income elasticity of 0.8. What will happen to the demand for good A if there is a 10% decrease in income?
Which of the following will result in a more elastic supply of a good?
Which of the following will result in a more elastic supply of a good?
What is the formula for calculating the income elasticity of demand?
What is the formula for calculating the income elasticity of demand?
If the price elasticity of demand for a good is -1.5, the demand is ________.
If the price elasticity of demand for a good is -1.5, the demand is ________.
If a firm wants to increase its sales by 10%, and the price elasticity of demand is -2, by how much should it decrease the price?
If a firm wants to increase its sales by 10%, and the price elasticity of demand is -2, by how much should it decrease the price?
A university decides to raise tuition fees to increase the total revenue it receives from students. This strategy will work if the demand for this institution's education is ________.
A university decides to raise tuition fees to increase the total revenue it receives from students. This strategy will work if the demand for this institution's education is ________.
The government is going to increase the tax on petrol to raise additional revenue for road repairs. The government will be able to raise more revenue by raising the petrol tax if the demand for petrol is ________.
The government is going to increase the tax on petrol to raise additional revenue for road repairs. The government will be able to raise more revenue by raising the petrol tax if the demand for petrol is ________.
The ABC Computer Company spends a lot of money on advertising designed to convince you that its personal computers are superior to all other personal computers. If the ABC Company is successful, what will happen to the demand for ABC personal computers and the demand for other firms' personal computers?
The ABC Computer Company spends a lot of money on advertising designed to convince you that its personal computers are superior to all other personal computers. If the ABC Company is successful, what will happen to the demand for ABC personal computers and the demand for other firms' personal computers?
What is the likely effect of a decrease in income on the demand for a good with an income elasticity of 0.5?
What is the likely effect of a decrease in income on the demand for a good with an income elasticity of 0.5?
If the cross-price elasticity of demand between two goods is positive, what can be concluded about the goods?
If the cross-price elasticity of demand between two goods is positive, what can be concluded about the goods?
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