Elasticity and its Application: Price Elasticity of Demand Quiz

Elasticity and its Application

Price Elasticity of Demand Quiz

Multiple-choice (MCQ)-based tests are commonly regarded as the most appropriate and practical kind of objective test items. The most crucial educational outcomes, knowledge, comprehension, judgment, and problem-solving, might be assessed using them. In order to help those who study finance and economics, I have developed a number of quizzes, including Microeconomics Quiz: The Market Forces of Supply and Demand and Financial management fundamentals. The subjects and chapters I selected for the economics students are from N. Gregory Mankiw's book "Principles of Economics."

The price elasticity of demand, which is calculated as the percentage change in quantity demanded divided by the percentage change in price, is a measure of how much the quantity desired of a good responds to a change in that good's price.

We can generalise about what influences the price elasticity of demand as there is no one simple rule that specifies what determines how elastic a demand curve is.

  • A good with near substitutes often have a more elastic demand since it is easier for consumers to switch from one good to another.
  • Demands for pleasures are often flexible, whilst those for requirements are frequently rigid.
  • The degree of demand elasticity in any particular market depends on how we define the market's boundaries. Narrowly defined markets often have more elastic demand than broadly defined markets because it is easier to identify close substitutes for narrowly specified items.
  • Demand for commodities is usually more elastic over longer time horizons.

The following quiz covers the important aspects of the price elasticity of demand and supply, which is a crucial issue in microeconomics.

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