Quiz 5.1 - Meaning, Types and Measurement of Elasticity of Demand (Graphical Illustration), importance of elasticity of demand

Elasticity of demand measures:

The responsiveness of demand to changes in supply

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The responsiveness of demand to changes in price

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The responsiveness of supply to changes in demand

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The responsiveness of price to changes in cost

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If the price of a commodity falls by 10% and demand rises by 20%, the price elasticity of demand is:

0.5

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1

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2

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10

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When demand is perfectly inelastic, the elasticity value is:

0

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1

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Greater than 1

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Less than 1

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Which of the following goods is likely to have inelastic demand?

Luxury cars

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Salt

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Fashion clothes

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Soft drinks

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The formula for price elasticity of demand is:

% change in quantity demanded ÷ % change in price

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% change in price ÷ % change in quantity demanded

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Change in price × change in demand

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Total revenue ÷ quantity demanded

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If demand is unitary elastic, a fall in price will:

Increase total revenue

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Decrease total revenue

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Leave total revenue unchanged

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Make total revenue zero

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When the demand curve is parallel to the Y-axis, demand is:

Perfectly elastic

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Perfectly inelastic

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Unitary elastic

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Relatively elastic

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Cross elasticity of demand measures:

Responsiveness of demand to change in income

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Responsiveness of demand for one good to change in price of another

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Responsiveness of demand to change in cost of production

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Responsiveness of demand to change in consumer taste

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If the elasticity of demand for a product is greater than 1, demand is said to be:

Inelastic

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Elastic

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Perfectly elastic

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Unitary elastic

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Income elasticity of demand for inferior goods is:

Positive

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Negative

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Zero

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Infinite

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Quiz 5.1 – Meaning, Types and Measurement of Elasticity of Demand (Graphical Illustration), importance of elasticity of demand

Quiz 5.1 – Meaning, Types and Measurement of Elasticity of Demand (Graphical Illustration), importance of elasticity of demand

ola September 16, 2025

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