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Elasticity Quiz

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Questions and Answers

What does price elasticity of demand measure?

How much the demand for a good changes over time

How much the price of a good changes in response to demand

How much the quantity demanded of a good responds to a change in the price of that good (correct)

How much the quantity supplied of a good responds to a change in the price of that good

What tends to make demand more elastic?

The higher the price of the good

The shorter the time period

The larger the number of close substitutes (correct)

The more broadly defined the market

How is price elasticity of demand computed?

As the total change in price divided by the total change in quantity demanded

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

As the total change in quantity demanded divided by the total change in price

As the percentage change in the quantity demanded divided by the percentage change in price (correct)

What does elasticity allow us to analyze with greater precision?

Supply and demand Signup and view all the answers

What factor makes demand less elastic?

The more narrowly defined the market Signup and view all the answers

What does price elasticity of demand measure?

The responsiveness of quantity demanded to a change in price Signup and view all the answers

What makes demand more elastic?

The larger the number of close substitutes Signup and view all the answers

What allows us to analyze supply and demand with greater precision?

Elasticity Signup and view all the answers

What makes demand less elastic?

If the good is a necessity Signup and view all the answers

How is the price elasticity of demand computed?

Percentage change in quantity demanded divided by percentage change in price Signup and view all the answers

Study Notes

Price Elasticity of Demand

Measures how responsive the quantity of a good or service demanded is to changes in its price
Tends to be more elastic when:
- Substitutes are available
- The good is a luxury
- The time to adjust to price changes is longer
Computed using the formula: (change in quantity demanded ÷ original quantity demanded) ÷ (change in price ÷ original price)
Allows us to analyze the sensitivity of demand to price changes with greater precision
Demand is less elastic when:
- The good is a necessity
- There are no close substitutes
- The time to adjust to price changes is shorter

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Description

Test your knowledge of elasticity with this quiz. Explore the concept of price elasticity of demand and its applications in analyzing supply and demand dynamics. Evaluate your understanding of how buyers and sellers respond to changes in market conditions.