Price Elasticity of Demand Quiz
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Questions and Answers

What does a price elasticity of -2 indicate?

  • A two percent price rise leads to a one percent increase in quantity demanded
  • A one percent price rise leads to a two percent increase in quantity demanded
  • A two percent price rise leads to a one percent decline in quantity demanded
  • A one percent price rise leads to a two percent decline in quantity demanded (correct)

    • What does the term 'more elastic' mean in the context of price elasticity?

  • A good's elasticity has greater magnitude, ignoring the sign (correct)
  • A good's elasticity has greater magnitude, considering the sign
  • A good's elasticity has a lesser magnitude, considering the sign
  • A good's elasticity has a lesser magnitude, ignoring the sign

    • Under what circumstances are price elasticities positive?

  • For luxury goods
  • For normal goods
  • For Veblen and Giffen goods (correct)
  • For inferior goods

    • What does the income elasticity of demand measure?

    <p>How the quantity demanded changes with consumer income changes</p> Signup and view all the answers

    What does the price elasticity of demand measure?

    <p>How sensitive the quantity demanded is to its price</p> Signup and view all the answers

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