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Elasticity of Supply and Demand Quiz

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Questions and Answers

What is elasticity a measure of?

How much buyers and sellers respond to changes in market conditions (correct)

The quantity demanded or quantity supplied

The willingness of consumers to buy less of a good as its price rises

The percentage change in quantity demanded divided by the percentage change in price

What does the law of demand state?

The quantity demanded responds substantially to changes in the price

A fall in the price of a good raises the quantity demanded (correct)

Demand is inelastic

The percentage change in quantity demanded divided by the percentage change in price

What does it mean when demand is elastic?

The percentage change in quantity demanded divided by the percentage change in price

The quantity demanded responds only slightly to changes in the price

The quantity demanded responds substantially to changes in the price (correct)

The willingness of consumers to buy less of a good as its price rises

How is price elasticity of demand calculated?

<p>Percentage change in quantity demanded divided by the percentage change in price</p> Signup and view all the answers

What does the price elasticity of demand measure?

<p>How willing consumers are to buy less of the good as its price rises OR more of the good as its price drops</p> Signup and view all the answers

Study Notes

Elasticity and Demand

Elasticity is a measure of how responsive the quantity of a good or service demanded is to changes in its price or other influential factors.

Law of Demand

The law of demand states that as the price of a good or service increases, the quantity demanded decreases, ceteris paribus (all other things being equal).

Elastic Demand

When demand is elastic, a small change in price leads to a relatively large change in the quantity demanded.

Price Elasticity of Demand

Price elasticity of demand is calculated by dividing the percentage change in quantity demanded by the percentage change in price.
It measures the responsiveness of the quantity demanded of a good or service to changes in its price.
The price elasticity of demand is a numerical value that indicates the degree of responsiveness, with a higher value indicating greater elasticity.

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Description

Test your knowledge of elasticity of supply and demand with this quiz. Questions cover the concept of elasticity, different elasticity points, calculating price elasticity of demand, determinants of price elasticity, and the impact of elasticity on business income.