Chapter 11. Price Elasticity of Demand

1.

Multiple Choice

1 min

1 pt

What is the price elasticity of demand (PED) for a product for which a 10% price rise reduces sales volume by 5%?

- 0.5

-2.0

-0.2

-5.0

2.

Multiple Choice

1 min

1 pt

Which of the following is a use of price elasticity of demand?

To calculate consumer spending based on their disposable income

To identify changes in the spending patterns of consumers

To calculate changes in the general price level

To estimate the changes in a firm's costs of production

3.

Multiple Choice

1 min

1 pt

A price cut from $2 to $1.50 causes the demand for peas to rise from 10.000 units to 11.500 units. What is the price elasticity of demand for peas?

-3,0

-0,6

+3,0

+0,6

4.

Multiple Choice

1 min

1 pt

Demand for a product is likely to be price inelastic the ....

fewer substitutes it has

fewer complements it has

higher its market price

greater the proportion of income spent on it

5.

Multiple Choice

1 min

1 pt

why is knowledge of price elasticity of demand useful?

To monitor the rate of price inflation

to calculate changes in disposable incomes

to estimate the effects of changes in production costs

to forecast the impact on revenues of different pricing strategies

6.

Multiple Choice

1 min

1 pt

A product has totally inelastic price elasticity of demand. What will happen to total revenue if the price of the product rises by 10%?

it will fall by 10%

it will fall to zero

it will remain unchanged

it will rise by 10%

7.

Multiple Choice

1 min

1 pt

A football club raises all stadium seat prices by 5%. The stadium is divided into four zones. The demand for seats falls by 1% in zone W, by 3% in zone X, by 5% in zone Y and by 6% in zone Z.

In which zone is the responsiveness of demand for seats to the price change elastic?

zone W

zone X

zone Y

zone Z

8.

Multiple Choice

1 min

1 pt

The table shows four people’s demand for t-shirts at two prices. Who has the most elastic demand for t-shirts when the price rises from $10 to $15?

Elsa

George

Hamid

Shara

9.

Multiple Choice

1 min

1 pt

A product has a price elasticity of demand that is greater than one.

What will happen to total revenue if the price of the product is reduced by 3%?

It will fall by more than 3%.

It will fall to zero

It will be unchanged

It will rise

10.

Multiple Choice

1 min

1 pt

The table illustrates the demand and supply for coffee in a market in Africa. When the price rises from $20 to $30 per kg, what is the price elasticity of supply for coffee?

-1.0

- 0.5

+ 1.0

+0.5

Explore this activity with a free account