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1 Price Elasticity of Demand Online Quiz Questions

Use this free practice quiz with 20 questions to review 1 Price Elasticity of Demand, test your knowledge, and prepare for your next test or exam.

20 questions

True or false

1 point

True or false: Price elasticity of demand is calculated by directly comparing the number of dollars a price changes with the number of units quantity demanded changes.

A
True
B
False

Choose one

1 point

Which statement correctly distinguishes price elasticity of demand from the slope of a demand curve?

A
Elasticity relates changes in quantity and price in their original units, while slope compares percentage changes.
B
Elasticity compares percentage changes in quantity and price, while slope relates changes in their original units.
C
Elasticity and slope both compare percentage changes, but use different directions of change.
D
Elasticity measures only the change in quantity, while slope measures only the change in price.

Fill in the blank

1 point

In the midpoint method, the percentage change in price uses the of the initial and new prices as its base.

Choose one

1 point

A product has a price elasticity of demand of $E_d=-0.6$ . How should its demand be classified?

A
Elastic, because any negative elasticity indicates a large response.
B
Inelastic, because the absolute value of elasticity is less than 1.
C
Unit-elastic, because the elasticity is not zero.
D
The classification cannot be determined without knowing the dollar price.

Choose all

1 point

Select all statements that correctly describe the midpoint method for calculating elasticity between two points.

A
It uses the average of the two quantity values as the base for the quantity percentage change.
B
It uses the initial value as the base, so reversing direction leaves the result unchanged.
C
It gives the same elasticity when calculating between the same two points in either direction.
D
It calculates elasticity by dividing the change in quantity in units by the change in price in dollars.

True or false

1 point

True or false: Signed price elasticity of demand is usually negative, but economists commonly use its absolute value to classify responsiveness.

A
True
B
False

Written response

1 point

The absolute value of a product's price elasticity of demand is $0.7$ . What is the demand classification?

Choose one

1 point

A price increase of $10\%$ is accompanied by a $6\%$ decrease in quantity demanded. What does this comparison imply about demand?

A
Demand is elastic because quantity demanded falls when price rises.
B
Demand is unit-elastic because both changes are expressed as percentages.
C
Demand is inelastic because quantity demanded changes by a smaller percentage than price.
D
The information is insufficient because the starting quantity is not given.

Fill in the blank

1 point

Using the midpoint method, price rises from $10$ to $15$ . What is the percentage change in price? Enter the numerical value only: %.

Choose all

1 point

Select all correct interpretations of the following absolute elasticity values.

A
If $|E_d|=1.4$ , quantity demanded changes by a greater percentage than price.
B
If $|E_d|=0.8$ , demand is unit-elastic.
C
If $|E_d|=0.8$ , quantity demanded changes by a smaller percentage than price.
D
If $|E_d|=1.4$ , quantity demanded changes by a smaller percentage than price.

Written response

1 point

Price rises from $20$ to $24$ , while quantity demanded falls from $100$ to $70$ . Using the midpoint method, what is the absolute price elasticity of demand, rounded to the nearest hundredth? Enter a number only.

Choose one

1 point

Using the midpoint method, price rises from $5$ to $7$ and quantity demanded falls from $60$ to $48$ . Which classification follows?

A
Elastic, because the quantity change is 12 units.
B
Inelastic, because the absolute elasticity is less than 1.
C
Unit-elastic, because both price and quantity change.
D
The classification cannot be determined without knowing why quantity changed.

Open ended

1 point

Price rises by $5\%$ , and quantity demanded falls by $2\%$ . Explain what this indicates about demand responsiveness and identify one conclusion that cannot be drawn from elasticity alone.

Choose one

1 point

What does price elasticity of demand measure?

A
The change in quantity demanded divided by the change in price, measured in units and dollars
B
The percentage change in quantity demanded divided by the percentage change in price
C
The percentage change in price divided by the percentage change in quantity demanded
D
The change in quantity demanded multiplied by the percentage change in price

Choose one

1 point

When economists use the absolute value of price elasticity of demand, what does that value tell them?

A
It shows whether quantity demanded rises or falls when price changes.
B
It converts percentage changes into changes measured in units.
C
It shows the magnitude of responsiveness without the sign indicating direction.
D
It explains why buyers respond to a price change.

Choose one

1 point

A good has a price elasticity of demand of $E_d = -0.6$ . How should its demand be classified?

A
Inelastic demand
B
Elastic demand
C
Unit-elastic demand
D
The demand is perfectly responsive

True or false

1 point

Price elasticity of demand, by itself, explains why buyers respond as they do to a price change.

A
True
B
False

Choose one

1 point

Why does the midpoint method avoid getting different elasticity results when calculating between the same two points in either direction?

A
It makes quantity demanded and price change by equal percentages.
B
It avoids calculating percentage changes.
C
It makes elasticity positive in every case.
D
It uses the average of the two endpoint values as the base, so the percentage changes have the same magnitude in either direction.

Written response

1 point

Quantity demanded rises from 40 units to 50 units. Using the midpoint method, what is the percentage change in quantity demanded? Round to the nearest 0.01 percentage point.

Written response

1 point

Price rises from $15 to $18 while quantity demanded falls from 120 units to 90 units. Using the midpoint method, what is the absolute value of price elasticity of demand? Round to the nearest hundredth.

1 Price Elasticity of Demand Online Quiz Questions

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