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- 1. Multiple Choice
Which is the correct definition of demand?
The quantity of a product that consumers are willing and able to demand at a given price.
The quantity of a product that consumers are willing and able to purchase at a given prices at a given period of time.
The quantity of a product that suppliers are willing and able to supply at a given price at a given period of time.
The amount of a given product or service that suppliers are willing to offer to consumers at a given price level at a given period.
- 2. Fill in the Blank
For normal goods, as price increases demand will typically.....
- 3. Multiple Choice
What is the definition of price elasticity of demand?
The amount that price changes when demand changes
The change in demand that impacts on price changes
The responsiveness of consumer demand to a change in the price of a good or service
The responsiveness of price to a change in consumer demand
- 4. Multiple Choice
What is the equation for PED?
- 5. Fill in the Blank
For normal goods, the PED number will always be ..................
- 6. Fill in the Blank
If PED > 1, demand for a good is said to be price.....
- 7. Multiple Choice
If PED is -2.5, then a 1% change in price will lead to what impact on quantity demanded?
Change of 25%
Change of 2.5%
Change of 0.25%
- 8. Multiple Choice
If a company has a good with a price elasticity of demand which is elastic, how should it maximise profits?
High prices
Low prices
- 9. Fill in the Blank
If PED < 1, then demand for the good is said to be price .........
- 10. Multiple Choice
If PED is -0.4, then a 1% change in price will lead to what impact on quantity demanded?
Change of 4%
Change of 14%
Change of 0.4%
- 11. Multiple Choice
If a company has a good with a price elasticity of demand which is inelastic, how should it maximise profits?
High prices
Low prices
- 12. Fill in the Blank
A good with a PED = 1, is said to have
- 13. Multiple Choice
If PED = infinity, any increase in price will lead to what impact on demand?
No impact on demand
Demand is infinite
Demand falls to zero
- 14. Multiple Choice
If PED = 0, any increase in price will lead to what impact on demand?
No impact on demand
Demand is infinite
Demand falls to zero
- 15. Multiple Choice
PANTS is an acronym for factors which influence the PED of a product. They stand for which of the following?
Participation rate; aggregate demand; neoclassical approach; timing; supply impacts
Proportion of income / expenditure; addictiveness of product; needs v. wants; timing; supply constraints
Political considerations; anomalies; new v. second-hand; timing; substitutes
Proportion of income / expenditure; addictiveness of product; necessity v. luxury; time horizon; substitutes
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