Price Elasticity of Demand
90 Questions
1 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

Which organization owns the trademarks CFA®, Chartered Financial Analyst®, AIMR-PPS®, and GIPS®?

  • CFA Program Curriculum
  • CFA Institute (correct)
  • CFA Charterholders
  • CFA Candidates

    • What does the copyright cover in the CFA Program Curriculum 2024?

  • Material written by the editor/s
  • Individual selections that first appeared elsewhere
  • Both material written by the editor/s and individual selections (correct)
  • None of the above

    • What is the purpose of the CFA Program Curriculum?

  • To provide accurate and authoritative information (correct)
  • To distribute copyrighted material
  • To obtain copyright permissions
  • To provide legal advice and professional services

    • What should be done if legal advice or other expert assistance is required?

    <p>Seek the services of a competent professional</p> Signup and view all the answers

    Which of the following is a function of money?

    <p>Storing value</p> Signup and view all the answers

    What is the study of production, distribution, and consumption called?

    <p>Economics</p> Signup and view all the answers

    Which of the following is a topic in demand and supply analysis?

    <p>Price elasticity</p> Signup and view all the answers

    What are the two broad areas of study in economics?

    <p>Microeconomics and macroeconomics</p> Signup and view all the answers

    Which measure of sensitivity does not depend on units of measure?

    <p>Price elasticity of demand</p> Signup and view all the answers

    What is the formula for own-price elasticity of demand?

    <p>%Δ Qx​d​​ / %Δ P​</p> Signup and view all the answers

    What does a price elasticity of demand of -0.2 mean?

    <p>Demand is inelastic</p> Signup and view all the answers

    What is the measure of sensitivity of quantity demanded to a change in price?

    <p>Own-price elasticity</p> Signup and view all the answers

    Which of the following is true about price elasticity of demand?

    <p>Price elasticity of demand measures the responsiveness of quantity demanded to changes in price</p> Signup and view all the answers

    What is the relationship between total, variable, fixed, and marginal costs?

    <p>Total cost equals variable cost plus fixed cost</p> Signup and view all the answers

    In a perfectly competitive market, what is the relationship between price and output?

    <p>Price equals marginal cost</p> Signup and view all the answers

    What is the role of demographics in business cycles?

    <p>Demographics can impact the economic cycle through changes in population size and age distribution</p> Signup and view all the answers

    According to the text, what is the slope of the demand curve?

    <p>-0.156</p> Signup and view all the answers

    According to the text, which variable is used to underscore the price of a good itself?

    <p>Px</p> Signup and view all the answers

    According to the text, what does the inverse demand function represent?

    <p>The highest price willingly paid for each quantity</p> Signup and view all the answers

    According to the text, what is the dependent variable in the demand function?

    <p>Qx</p> Signup and view all the answers

    Which of the following is true about the theory of the consumer?

    <p>It focuses on consumption by utility-maximizing individuals.</p> Signup and view all the answers

    What does the law of demand state?

    <p>As the price of a good falls, buyers will choose to buy less of it.</p> Signup and view all the answers

    What is the demand function?

    <p>A relationship between the quantity demanded of a good and its own price, consumers' income, and the price of another good.</p> Signup and view all the answers

    What does a negative sign on the coefficient of gasoline price in the demand function indicate?

    <p>As the price of gasoline goes up, fewer will likely be purchased and consumed.</p> Signup and view all the answers

    Which of the following statements is true about own-price elasticity of demand?

    <p>When the magnitude is less than one, demand is said to be inelastic</p> Signup and view all the answers

    If the elasticity coefficient is equal to negative one, what is the demand called?

    <p>Unit elastic</p> Signup and view all the answers

    Why is the own-price elasticity of demand always negative?

    <p>Because a rise in price is associated with a fall in quantity demanded</p> Signup and view all the answers

    At what price is the demand considered elastic, given the elasticity coefficient of -1.28?

    <p>€5 per liter</p> Signup and view all the answers

    What term in Equation 6 of the text remains constant along the entire demand curve for a linear demand curve?

    <p>∆Q/∆P</p> Signup and view all the answers

    According to Exhibit 2, where is demand considered inelastic for a negatively sloped linear demand curve?

    <p>Below the midpoint</p> Signup and view all the answers

    Which of the following is a trademark owned by CFA Institute?

    <p>CFA®</p> Signup and view all the answers

    What is the purpose of the CFA Program Curriculum?

    <p>To provide accurate and authoritative information</p> Signup and view all the answers

    What is the measure of sensitivity of quantity demanded to a change in price?

    <p>Own-price elasticity of demand</p> Signup and view all the answers

    Which organization owns the trademarks CFA®, Chartered Financial Analyst®, AIMR-PPS®, and GIPS®?

    <p>CFA Institute</p> Signup and view all the answers

    According to the text, what are the two broad areas of study in economics?

    <p>Microeconomics and macroeconomics</p> Signup and view all the answers

    What is the measure of sensitivity of quantity demanded to a change in price?

    <p>Price elasticity of demand</p> Signup and view all the answers

    According to the text, what does the inverse demand function represent?

    <p>The relationship between price and quantity demanded</p> Signup and view all the answers

    What does a negative sign on the coefficient of gasoline price in the demand function indicate?

    <p>An inverse relationship between gasoline price and quantity demanded</p> Signup and view all the answers

    Which of the following is a topic covered in the Economics Learning Module 1?

    <p>Analysis of Market Structures</p> Signup and view all the answers

    What is the relationship between price and output in a perfectly competitive market?

    <p>Price and output are directly related</p> Signup and view all the answers

    What is the role of demographics in business cycles?

    <p>Demographics influence the timing and severity of business cycles</p> Signup and view all the answers

    What does a negative sign on the coefficient of gasoline price in the demand function indicate?

    <p>Gasoline price has a negative impact on demand</p> Signup and view all the answers

    According to the text, what is the slope of the demand curve?

    <p>-1/6.39</p> Signup and view all the answers

    What does a negative sign on the coefficient of gasoline price in the demand function indicate?

    <p>An increase in gas price leads to a decrease in quantity demanded.</p> Signup and view all the answers

    What is the measure of sensitivity of quantity demanded to a change in price?

    <p>Own-price elasticity of demand</p> Signup and view all the answers

    According to Exhibit 1, at what price is the demand considered elastic, given the elasticity coefficient of -1.28?

    <p>€8.92 per liter</p> Signup and view all the answers

    Which of the following variables is NOT mentioned as a factor that influences consumers' demand for a product or service?

    <p>Price of the product</p> Signup and view all the answers

    What is the demand function in Equation 1 saying?

    <p>The quantity demanded of good X depends on the price of good X, consumers' income, and the price of good Y</p> Signup and view all the answers

    In Equation 2, what does the negative sign on the coefficient of gasoline price indicate?

    <p>As the price of gasoline rises, the quantity demanded of gasoline will decrease</p> Signup and view all the answers

    If the price of gasoline (Px) is €1.48 per liter, per household income (I) is €50,000, and the price of the average automobile (Py) is €20,000, what is the per-household monthly demand for gasoline according to the function in Equation 2?

    <p>47.54 liters</p> Signup and view all the answers

    Which of the following statements is true about own-price elasticity of demand?

    <p>When the magnitude of the own-price elasticity coefficient is less than one, demand is said to be elastic.</p> Signup and view all the answers

    What does a price elasticity of demand of -0.2 mean?

    <p>A 1% increase in price leads to a 0.2% decrease in quantity demanded.</p> Signup and view all the answers

    According to the text, what does the inverse demand function represent?

    <p>The relationship between price and quantity demanded.</p> Signup and view all the answers

    According to Exhibit 2, where is demand considered inelastic for a negatively sloped linear demand curve?

    <p>Below the midpoint.</p> Signup and view all the answers

    What is the formula for own-price elasticity of demand?

    <p>$E_d = \frac{% \Delta Q},{% \Delta P}$</p> Signup and view all the answers

    What does a negative sign on the coefficient of gasoline price in the demand function indicate?

    <p>An inverse relationship between price and quantity demanded.</p> Signup and view all the answers

    Which measure of sensitivity does not depend on units of measure?

    <p>Price elasticity of demand</p> Signup and view all the answers

    What does a price elasticity of demand of -0.2 mean?

    <p>A 1% rise in price would result in a fall in quantity demanded of 0.2%</p> Signup and view all the answers

    What is the formula for own-price elasticity of demand?

    <p>E​p​dx​ ​​ = ​( ​ _ ​Δ ​P​ ​) ​ ​​​(_ ​ d ​)​​​ ​Qx​ ​​ x Δ ​Qx​d​​ ​Px​ ​</p> Signup and view all the answers

    What does the negative sign on the coefficient of gasoline price in the demand function indicate?

    <p>There is an inverse relationship between price and quantity demanded</p> Signup and view all the answers

    Which of the following is true about the study of economics?

    <p>It is divided into macroeconomics and microeconomics</p> Signup and view all the answers

    What is the purpose of the CFA Program Curriculum?

    <p>To prepare candidates for the CFA Level I exam</p> Signup and view all the answers

    What is the measure of sensitivity of quantity demanded to a change in price?

    <p>Price elasticity of demand</p> Signup and view all the answers

    According to the text, what are the two broad areas of study in economics?

    <p>Macroeconomics and microeconomics</p> Signup and view all the answers

    Which of the following variables is NOT mentioned as a factor that influences consumers' demand for a product or service?

    <p>Price of good Y</p> Signup and view all the answers

    What is the measure of sensitivity of quantity demanded to a change in price?

    <p>Price elasticity of demand</p> Signup and view all the answers

    What is the formula for own-price elasticity of demand?

    <p>$E = \frac{%\Delta Q},{%\Delta P}$</p> Signup and view all the answers

    According to Exhibit 1, at what price is the demand considered elastic, given the elasticity coefficient of -1.28?

    <p>€2.48 per liter</p> Signup and view all the answers

    According to the text, what is the purpose of the CFA Program Curriculum?

    <p>To provide accurate and authoritative information on economics</p> Signup and view all the answers

    What does a negative sign on the coefficient of gasoline price in the demand function indicate?

    <p>The demand for gasoline is inversely related to its price</p> Signup and view all the answers

    What is the formula for own-price elasticity of demand?

    <p>E = (Q2 - Q1) / (P2 - P1)</p> Signup and view all the answers

    Which organization owns the trademarks CFA®, Chartered Financial Analyst®, AIMR-PPS®, and GIPS®?

    <p>CFA Institute</p> Signup and view all the answers

    Which of the following is NOT a topic covered in the Economics Learning Module 1?

    <p>Aggregate Output, Prices, and Economic Growth</p> Signup and view all the answers

    What is the measure of sensitivity of quantity demanded to a change in price?

    <p>Price Elasticity of Demand</p> Signup and view all the answers

    What does the negative sign on the coefficient of gasoline price in the demand function indicate?

    <p>There is a negative relationship between gasoline price and quantity demanded</p> Signup and view all the answers

    What is the formula for price elasticity of demand?

    <p>(\frac{{\Delta P}},{{\Delta Q}})</p> Signup and view all the answers

    Which of the following variables is NOT mentioned as a factor that influences consumers' demand for a product or service?

    <p>The price of the product or service</p> Signup and view all the answers

    According to the text, what is the slope of the demand curve?

    <p>Negative</p> Signup and view all the answers

    What does a negative sign on the coefficient of gasoline price in the demand function indicate?

    <p>Gasoline and automobiles have a negative cross-price elasticity of demand</p> Signup and view all the answers

    What is the per-household monthly demand for gasoline according to the function in Equation 2, if the price of gasoline (Px) is €1.48 per liter, per household income (I) is €50,000, and the price of the average automobile (Py) is €20,000?

    <p>47.54 liters</p> Signup and view all the answers

    Which measure of sensitivity does not depend on units of measure?

    <p>Price elasticity of demand</p> Signup and view all the answers

    What is the formula for own-price elasticity of demand?

    <p>Epd = %ΔQx / %ΔPx</p> Signup and view all the answers

    What does a negative sign on the coefficient of gasoline price in the demand function indicate?

    <p>An increase in gasoline price leads to a decrease in quantity demanded</p> Signup and view all the answers

    What is the relationship between price and output in a perfectly competitive market?

    <p>Price and output are negatively related</p> Signup and view all the answers

    Which of the following statements is true about the own-price elasticity of demand?

    <p>The own-price elasticity of demand is always negative.</p> Signup and view all the answers

    When is demand considered to be inelastic?

    <p>When the magnitude of the own-price elasticity coefficient is less than one.</p> Signup and view all the answers

    What does it mean when demand is said to be elastic?

    <p>The quantity demanded is very sensitive to changes in price.</p> Signup and view all the answers

    What does it mean when demand is said to be unit elastic?

    <p>The quantity demanded is moderately affected by changes in price.</p> Signup and view all the answers

    What is the formula for calculating the own-price elasticity of demand?

    <p>$E_d = \frac{P},{Q} \cdot \frac{\Delta Q},{\Delta P}$</p> Signup and view all the answers

    What does the term $P/Q$ represent in the formula for calculating the own-price elasticity of demand?

    <p>The slope of the demand curve.</p> Signup and view all the answers

    Study Notes

    Studying That Suits You

    Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

    Quiz Team

    Related Documents

    cfa-program2024L1PrereqRead-Economics (1).PDF

    Description

    This quiz will test your understanding of price elasticity of demand and how to calculate and interpret price, income, and cross-price elasticities. You will also learn about the factors that affect each measure.

    More Like This

    Use Quizgecko on...
    Browser
    Open
    Browser
    Browser