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 (A)</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 (B)</p> Signup and view all the answers

What does a point elasticity of zero indicate?

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

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

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

What does a negative elasticity value indicate?

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

What does a point elasticity greater than one signify?

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

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