ThatQuiz Test Library Take this test now
Elasticity of Demand - Test
Contributed by: Porter
  • 1. What does the price elasticity of demand measure?
A) Profit margin of a product
B) Responsiveness of quantity demanded to a change in price
C) Total quantity demanded for a product
D) Average price of a product
  • 2. What does an elasticity value of 0 indicate?
A) No demand for the product
B) Perfectly elastic demand
C) Unitary elastic demand
D) Perfectly inelastic demand
  • 3. If a good has a lot of close substitutes, the demand for this good is likely to be:
A) Perfectly elastic
B) Inelastic
C) Unitary elastic
D) Elastic
  • 4. Why is knowing the elasticity of demand important for businesses?
A) To maximize production efficiency
B) To focus on product quality
C) To set optimal pricing strategies
D) To increase advertising expenditure
  • 5. How does the short-term vs. long-term impact the price elasticity of demand for a product?
A) In the short-term, demand tends to be less elastic than in the long-term
B) Short-term elasticity usually exceeds long-term elasticity
C) Time frame has no impact on price elasticity of demand
D) In the short-term, demand tends to be more elastic than in the long-term
  • 6. If the cross-price elasticity between two goods is positive, what does this imply about their relationship?
A) Inferior goods
B) Complements
C) Substitutes
D) Normal goods
  • 7. What is the main factor influencing the price elasticity of demand for a good or service?
A) Advertising budget
B) Consumer income
C) Production cost
D) Availability of substitutes
  • 8. If the income elasticity of a product is negative, what does this indicate?
A) Normal good
B) Luxury good
C) Inferior good
D) Giffen good
  • 9. What is the formula for calculating price elasticity of demand?
A) Price / Quantity demanded
B) Percentage change in quantity demanded / Percentage change in price
C) Total quantity demanded * Price
D) Change in demand / Change in price
Created with That Quiz — the math test generation site with resources for other subject areas.