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What is the simplest way to express price elasticity of demand?
What is the simplest way to express price elasticity of demand?
The Percentage Method for measuring price elasticity of demand is also known as the Flux Method.
The Percentage Method for measuring price elasticity of demand is also known as the Flux Method.
True
What formula represents the Price Elasticity of Demand?
What formula represents the Price Elasticity of Demand?
E_d = - (Percentage change in Quantity demanded) / (Percentage change in Price)
Elasticity of demand is calculated as the ratio of percentage change in quantity demanded to percentage change in _____ .
Elasticity of demand is calculated as the ratio of percentage change in quantity demanded to percentage change in _____ .
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Match the following methods with their descriptions:
Match the following methods with their descriptions:
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What happens to total expenditure when the price of an elastic good decreases?
What happens to total expenditure when the price of an elastic good decreases?
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If the price elasticity of demand is less than one, total expenditure increases when the price decreases.
If the price elasticity of demand is less than one, total expenditure increases when the price decreases.
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What is the relationship between price elasticity of demand and total expenditure for elastic goods?
What is the relationship between price elasticity of demand and total expenditure for elastic goods?
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When the price elasticity of demand is greater than 1, demand is considered __________.
When the price elasticity of demand is greater than 1, demand is considered __________.
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Match the scenarios with their outcomes:
Match the scenarios with their outcomes:
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What does the elasticity of demand measure?
What does the elasticity of demand measure?
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An increase in price will always lead to an increase in quantity demanded.
An increase in price will always lead to an increase in quantity demanded.
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What is the formula for calculating the elasticity of demand?
What is the formula for calculating the elasticity of demand?
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The __________ method measures the change in quantity demanded in relation to changes in price.
The __________ method measures the change in quantity demanded in relation to changes in price.
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Match the following terms with their definitions:
Match the following terms with their definitions:
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What happens to demand if the price of a substitute good decreases?
What happens to demand if the price of a substitute good decreases?
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Inelastic demand means that a change in price leads to a proportionately larger change in quantity demanded.
Inelastic demand means that a change in price leads to a proportionately larger change in quantity demanded.
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What is one factor that can affect the elasticity of demand?
What is one factor that can affect the elasticity of demand?
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Cross elasticity of demand refers to the change in demand for a commodity concerning the change in price of a substitute or complementary good.
Cross elasticity of demand refers to the change in demand for a commodity concerning the change in price of a substitute or complementary good.
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What are the three main determinants of demand?
What are the three main determinants of demand?
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The percentage change in demand for a commodity with respect to the percentage change in its price is known as __________.
The percentage change in demand for a commodity with respect to the percentage change in its price is known as __________.
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Match the following types of elasticity with their definitions:
Match the following types of elasticity with their definitions:
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Which type of elasticity is beyond the scope of the syllabus?
Which type of elasticity is beyond the scope of the syllabus?
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Income elasticity of demand relates to the change in demand with respect to changes in the price of commodities.
Income elasticity of demand relates to the change in demand with respect to changes in the price of commodities.
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Define cross elasticity of demand.
Define cross elasticity of demand.
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What does 'Q' represent in the formula for price elasticity of demand?
What does 'Q' represent in the formula for price elasticity of demand?
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In the Percentage Method, absolute changes in quantity and price are considered.
In the Percentage Method, absolute changes in quantity and price are considered.
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What is the formula used to calculate price elasticity of demand?
What is the formula used to calculate price elasticity of demand?
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The price elasticity of demand is defined as the ratio of the percentage change in quantity demanded to the percentage change in _____ .
The price elasticity of demand is defined as the ratio of the percentage change in quantity demanded to the percentage change in _____ .
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A negative sign is always associated with the price elasticity of demand.
A negative sign is always associated with the price elasticity of demand.
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What does a price elasticity of demand value of 1.25 indicate?
What does a price elasticity of demand value of 1.25 indicate?
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What does a price elasticity of demand of (-) 2 indicate?
What does a price elasticity of demand of (-) 2 indicate?
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Higher numerical values of price elasticity indicate a smaller effect of price changes on quantity demanded.
Higher numerical values of price elasticity indicate a smaller effect of price changes on quantity demanded.
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What happens to the demand for a good if its price rises, given that the price elasticity of demand is high?
What happens to the demand for a good if its price rises, given that the price elasticity of demand is high?
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If the price of commodity 'x' rises by 10% and the demand decreases by 20%, it is considered to be _____ elastic.
If the price of commodity 'x' rises by 10% and the demand decreases by 20%, it is considered to be _____ elastic.
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Which of the following describes a more elastic demand?
Which of the following describes a more elastic demand?
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If commodity 'y' experiences a 5% rise in demand when its price increases by 10%, it is considered to be more elastic than commodity 'x' that has a 20% rise in demand.
If commodity 'y' experiences a 5% rise in demand when its price increases by 10%, it is considered to be more elastic than commodity 'x' that has a 20% rise in demand.
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What does price elasticity of demand quantify?
What does price elasticity of demand quantify?
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Match the commodities with their expected change in demand given a price increase of 10%.
Match the commodities with their expected change in demand given a price increase of 10%.
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Study Notes
Elasticity of Demand
- Demand is affected by factors like price changes, consumer income, and related good prices.
- Elasticity measures how responsive demand is to these changes.
- Price elasticity of demand measures the percentage change in demand for a good/service in response to a percentage change in its price.
- Elasticity of demand can be calculated as the percentage change in quantity demanded divided by the percentage change in price.
- A high numerical value for elasticity indicates a significant impact of price changes on quantity demanded.
- Elastic demand means a larger change in quantity demanded for a small change in price.
- Inelastic demand means a smaller change in quantity demanded for a large change in price.
- Unitary elastic demand means the percentage change in quantity demanded is equal to the percentage change in price.
- Perfectly elastic demand means an infinite amount of demand at a certain price.
- Perfectly inelastic demand means no change in quantity demanded regardless of price changes.
- Price elasticity of demand is affected by the nature of the good (necessity, comfort, luxury), availability of substitutes, income levels, time periods, and consumer habits.
- Total expenditure is closely related to price elasticity of demand. If demand is elastic, a price decrease leads to increased total expenditure. If demand is inelastic, a price decrease leads to decreased total expenditure.
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Description
Test your understanding of the elasticity of demand, focusing on how demand reacts to changes in price, consumer income, and related goods. This quiz covers various concepts including price elasticity, elastic vs. inelastic demand, and unitary elastic demand. Enhance your insights on consumer behavior and market dynamics with this engaging quiz.
