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Questions and Answers
What type of goods are likely to have relatively inelastic demand?
What type of goods are likely to have relatively inelastic demand?
- Seasonal goods
- Luxury goods
- Necessary goods (correct)
- Generic goods
What does it mean when demand is said to be inelastic?
What does it mean when demand is said to be inelastic?
- The quantity demanded responds to a lesser extent than the given change in price (correct)
- The percentage change in demand is greater than the percentage change in price
- The percentage change in demand is less than the percentage change in price
- The quantity demanded responds strongly to the given change in price
What is the value of elasticity of demand for relatively inelastic demand?
What is the value of elasticity of demand for relatively inelastic demand?
- Variable and unpredictable
- Less than one (correct)
- Equal to one
- Greater than one
When is demand said to be elastic?
When is demand said to be elastic?
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What does it mean when the price elasticity of demand is zero?
What does it mean when the price elasticity of demand is zero?
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Study Notes
Elasticity of Demand
- Goods with relatively inelastic demand tend to be essential items, such as medicines, or habit-forming products like tobacco and addictive substances.
- Inelastic demand means that changes in price have a relatively small effect on the quantity demanded.
- For relatively inelastic demand, the elasticity of demand value is less than 1, indicating that a 1% change in price will result in a less than 1% change in quantity demanded.
- Demand is said to be elastic when changes in price have a relatively large effect on the quantity demanded.
- When the price elasticity of demand is zero, it means that the quantity demanded does not respond at all to changes in price.
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Description
Test your knowledge of price elasticity of demand with this quiz. Explore concepts such as elastic and inelastic demand, the effects of price changes on quantity demanded, and the different types of price elasticity.
