Practice Questions
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If the price of a product decreases by 10% and the quantity demanded increases by 20%, how is the demand for this product characterized?
When the price goes down, people buy much more of the product. Other options are incorrect because Some might think that demand doesn't change much; U...
If a product's price decreases and the total revenue increases, what does this indicate about the price elasticity of demand for that product?
When the price goes down and people buy more, it shows they are responsive to price changes. Other options are incorrect because Some might think that...
How does an increase in price affect total revenue when the demand for a product is elastic?
When demand is elastic, people buy less if the price goes up. Other options are incorrect because Some might think higher prices always mean more mone...
Which of the following scenarios best exemplifies perfectly inelastic demand?
Perfectly inelastic demand means people will buy the same amount no matter the price. Other options are incorrect because Luxury items are not essenti...
Which of the following statements best describes the relationship between the price elasticity of demand and factors that affect it?
When a good takes up a lot of your money, you think more about its price. Other options are incorrect because This option suggests that more substitut...
What is the definition of elasticity of demand in economics?
Elasticity of demand shows how much the amount people want to buy changes when prices go up or down. Other options are incorrect because This option c...
If the price of a product increases by 10% and the quantity demanded decreases by 5%, what is the price elasticity of demand?
The price elasticity of demand is calculated by dividing the percentage change in quantity demanded by the percentage change in price. Other options a...
Which of the following factors generally leads to a more elastic demand for a product?
When there are many similar products, people can easily switch if the price goes up. Other options are incorrect because Some think that if a product ...
Elastic demand is to a significant change in quantity demanded as inelastic demand is to what?
Inelastic demand means that when prices change, the amount people buy doesn't change much. Other options are incorrect because Some might think that i...
A local coffee shop decides to raise the price of its medium latte from $4 to $5. After the price increase, they notice that the quantity of medium lattes sold decreases from 100 cups to 60 cups per day. Based on this scenario, how would you classify the demand for medium lattes in this coffee shop?
When the price goes up, fewer people buy the lattes. Other options are incorrect because Some might think that a small change in sales means demand is...
A coffee shop notices that when they increase the price of coffee by 10%, the quantity demanded decreases by 25%. How should they categorize the demand for coffee?
The demand is elastic because a small price change leads to a big change in how much people buy. Other options are incorrect because Some might think ...
If the price of a luxury car increases by 10% and the quantity demanded decreases by 20%, how would you classify the demand for luxury cars?
Demand is elastic when a small change in price causes a big change in how much people want to buy. Other options are incorrect because Some might thin...
A local bakery raises the price of its signature cake by 20% and observes that the quantity demanded decreases by 10%. How would you classify the demand for the cake based on this information?
Inelastic demand means that when the price goes up, people still buy almost the same amount. Other options are incorrect because Elastic demand means ...
Which of the following statements accurately describe the elasticity of demand? Select all that apply.
Other options are incorrect because Many think elastic demand means a small change in quantity; Some believe inelastic demand means people buy the sam...
The measure of how much the quantity demanded of a good responds to a change in price is known as _____ of demand.
Elasticity shows how much people buy when prices change. Other options are incorrect because Utility means satisfaction from a good; Scarcity is about...
Arrange the following steps in the correct order for calculating and interpreting price elasticity of demand: A) Analyze the impact on quantity demanded, B) Calculate the percentage changes in quantity and price, C) Determine whether the demand is elastic, inelastic, or unit elastic, D) Identify the initial price and quantity demanded.
First, you need to know the starting price and quantity. Other options are incorrect because This option suggests analyzing the impact before calculat...
If a company raises the price of its product and observes a significant decrease in quantity demanded, what is the most likely underlying cause of this outcome?
When demand is elastic, it means that people really pay attention to price changes. Other options are incorrect because Some might think that necessit...
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