18 Questions
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price.
True
A product with inelastic demand is more likely to experience a significant increase in revenue when prices are raised.
True
Marketing strategies should not consider factors like availability of substitutes and time horizon.
False
Income elasticity of demand measures the responsiveness of quantity demanded to changes in income.
True
Normal goods have negative income elasticity of demand.
False
Inferior goods experience a decrease in quantity demanded when income rises.
True
Elasticity in economics refers to the responsiveness of one economic variable to a change in another.
True
Price Elasticity of Demand measures the responsiveness of the quantity demanded of a good or service to changes in its price.
True
Elastic demand occurs when the percentage change in quantity demanded is less than the percentage change in price.
False
Inelastic demand happens when the percentage change in quantity demanded is greater than the percentage change in price.
False
Unit elastic demand exists when the percentage change in quantity demanded is equal to the percentage change in price.
True
Income Elasticity of Demand measures how the quantity demanded of a good or service changes in response to a change in income.
True
Luxury goods have an income elasticity of demand greater than 1.
True
Income elasticity of demand accurately predicts consumer behavior in all cases.
False
Substitutes have a positive cross-price elasticity of demand.
True
Complements have a negative cross-price elasticity of demand.
True
Price elasticity of demand measures the responsiveness of quantity demanded to changes in income.
False
Income elasticity of demand can impact business strategies such as pricing, product development, and marketing.
True
Test your knowledge on factors affecting price elasticity of demand and their implications for business strategy, including pricing and marketing decisions. Explore how availability of substitutes, type of goods, and time horizon impact the elasticity of demand.
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