10 Questions
What is the price elasticity of demand a measure of?
Responsiveness of quantity demanded to changes in determinants
In what situation is demand considered elastic?
Quantity demanded responds substantially to changes in price
What factor makes demand more elastic according to the text?
Availability of close substitutes
How does the time horizon affect the elasticity of demand?
Longer time horizon leads to more elastic demand
What characterizes inelastic demand?
Quantity demanded responds only slightly to changes in price
If the price elasticity of demand for a product is calculated to be 0.5, how will total revenue change when the price increases?
Total revenue will increase
What type of demand is characterized by a price elasticity of demand equal to 1?
Unit elastic demand
If the price elasticity of supply for a product is very high, how will total revenue be affected by an increase in price?
Total revenue will decrease
What will happen to total revenue when the price of a product with perfectly elastic demand increases?
Total revenue will remain constant
Considering the announcement of a new wheat hybrid increasing production by 20%, what type of elasticity is most relevant for farmers' reactions?
Price elasticity of supply
Test your knowledge on elasticity of demand and its application in economics. Learn about the price elasticity of demand and how it measures the responsiveness of quantity demanded to price changes.
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