Question 1

Which formula is used to calculate price elasticity of demand?

Accepted Answer

\frac{	ext{Percentage change in quantity demanded}}{	ext{Percentage change in price}}

Answer

\frac{	ext{Percentage change in quantity demanded}}{	ext{Percentage change in price}}

Answer

\frac{	ext{Percentage change in quantity demanded}}{	ext{Percentage change in price}}

Answer

\frac{	ext{Percentage change in quantity demanded}}{	ext{Percentage change in price}}

Question 2

If the price of a product increases by 10% and its demand decreases by 5%, what is the price elasticity of demand?

Accepted Answer

\frac{	ext{Percentage change in quantity demanded}}{	ext{Percentage change in price}}

Answer

\frac{	ext{Percentage change in quantity demanded}}{	ext{Percentage change in price}}

Answer

\frac{	ext{Percentage change in quantity demanded}}{	ext{Percentage change in price}}

Answer

\frac{	ext{Percentage change in quantity demanded}}{	ext{Percentage change in price}}

Question 3

What does it mean if the price elasticity of demand is less than 1?

Accepted Answer

Demand is inelastic

Answer

Demand is elastic

Answer

Demand is perfectly elastic

Answer

Demand is unitary elastic

Question 4

If a 20% increase in price leads to a 10% decrease in quantity demanded, what is the price elasticity of demand?

Accepted Answer

\frac{	ext{Percentage change in quantity demanded}}{	ext{Percentage change in price}}

Answer

\frac{	ext{Percentage change in quantity demanded}}{	ext{Percentage change in price}}

Answer

\frac{	ext{Percentage change in quantity demanded}}{	ext{Percentage change in price}}

Answer

\frac{	ext{Percentage change in quantity demanded}}{	ext{Percentage change in price}}

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