Question

33) Price elasticity of demand is defined as:
A) the amount by which demand exceeds supply
B) the extent to which quantity demanded responds to a change in price
C) the extent to which price responds to a change in quantity demanded
D) the difference between the highest and lowest price people are willing to pay for a commodity
34) Price elasticity of demand is measured by:
A) the change in price divided by the change in quantity
B) the change in quantity demanded divided by the change in price
C) the percentage change in quantity demanded divided by the percentage change in price
D) the percentage change in price divided by the percentage change in quantity demanded

35) The coefficient of elasticity of demand is the value used to determine:
A) the elasticity of products
B) the degree of price variability for goods with inelastic demand
C) the degree of elasticity of demand for a product
D) the degree of price variability for goods with elastic demand
36) The formula for price elasticity of demand is:
A) ΔP/ΔQ
B) %ΔQ/%ΔP
C) %ΔP/%ΔQ
D) ΔQ/ΔP

Answer 1

(33)

Price elasticity of demand measures the change in quantity demanded due to change in price of that good by keeping other things constant.

It states that how responsive is quantity demand due to change in price of good.

Hence, price elasticity of demand is defined as the extent to which quantity demanded responds to a change in price.

Answer: Option (B)

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(34)

Price elasticity of demand measures the change in quantity demanded due to change in price of that good by keeping other things constant.

It is measured by % change in quantity demanded divided by % change in price.

Price elasticity of demand = (% change in quantity demand / % change in price)

Answer:Option (C)

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(35) The coefficient of elasticity of demand is the value used to determine is degree of elasticity of demand for a product.

Note: If the coefficient of elasticity of demand is less than one (in absolute terms) , then demand is said to be inelastic.

If the coefficient of elasticity of demand is more than one (in absolute terms), then demand is said to be elastic.

If the coefficient of elasticity of demand is equal to one (in absolute terms), then demand is said to be unitary elastic.

Answer: Option (C)

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(36) Formual of price elasticity of demand (Ed)

Ed = (% change in quantity demand / % change in price)

=> Ed = (%ΔQ/%ΔP)

Answer: Option (B)