Effect of Income on Demand for Normal Goods Quiz
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Questions and Answers

At which point on the demand curve does elasticity become infinity?

  • Point A
  • Point t (correct)
  • Point T
  • Point R

    • What is the significance of the midpoint method in calculating price elasticity?

  • It leads to an infinite price elasticity.
  • It results in a price elasticity of zero.
  • It avoids confusion between initial and final price and quantity figures. (correct)
  • It is only applicable when the demand curve is a straight line.

    • What happens to elasticity as you move from point T towards point t on the demand curve?

  • Elasticity remains constant
  • Elasticity decreases
  • Elasticity becomes zero
  • Elasticity increases (correct)

    • When might arc-elasticity be required to be calculated?

    <p>When elasticity needs to be measured over a range of prices</p> Signup and view all the answers

    How is elasticity calculated using the midpoint method?

    <p>By taking the averages of the initial and final price and quantity figures</p> Signup and view all the answers

    What does a point elasticity of zero indicate?

    <p>Perfectly inelastic demand</p> Signup and view all the answers

    Why is it important to calculate elasticity over an arc of the demand curve?

    <p>When price and quantity changes are large</p> Signup and view all the answers

    What happens to elasticity at the midpoint of the demand curve?

    <p>Elasticity is one</p> Signup and view all the answers

    What does a negative elasticity value indicate?

    <p>Inelastic demand</p> Signup and view all the answers

    What does a point elasticity greater than one signify?

    <p>Perfectly elastic demand</p> Signup and view all the answers

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