BSED Major in Social Studies 2

Soc Sci 4 #10

QUIZ.SOCSCI 4.010.ELASTICITY OF DEMAND AND SUPPLY

1. What does the Price Elasticity of Demand (PED) measure?
A. The responsiveness of quantity supplied to a change in price.
B. The responsiveness of quantity demanded to a change in price.
C. The responsiveness of income to a change in price.
D. The responsiveness of quantity demanded to a change in income.
Answer: B. The responsiveness of quantity demanded to a change in price.
Explanation: PED measures how sensitive the quantity demanded of a good is to changes in its price.

2. Which type of elasticity measures how the quantity demanded of one good responds to a change in the price of another good?
A. Price Elasticity of Demand (PED)
B. Cross-Price Elasticity of Demand (XED)
C. Income Elasticity of Demand (YED)
D. Price Elasticity of Supply (PES)
Answer: B. Cross-Price Elasticity of Demand (XED)
Explanation: XED measures the relationship between the quantity demanded of one good and the price change of a related good (substitute or complement).

3. What is the key determinant for demand elasticity related to the availability of substitutes?
A. Price levels of other goods.
B. Consumer income.
C. Availability of similar goods.
D. Time horizon.
Answer: C. Availability of similar goods.
Explanation: The presence of close substitutes makes demand more elastic as consumers can easily switch to alternative products.

4. If the percentage change in quantity demanded is less than the percentage change in price, demand is considered
A. Inelastic
B. Elastic
C. Unitary elastic
D. Normal
Answer: A. Inelastic
Explanation: Inelastic demand means that consumers are less responsive to price changes, resulting in a smaller change in quantity demanded compared to the price change.

5. What does the Cross-Price Elasticity of Supply measure?
A. The responsiveness of quantity supplied to a change in price.
B. The responsiveness of quantity supplied to a change in income.
C. How the quantity supplied of one good responds to a change in the price of another good.
D. The responsiveness of income to a change in price.
Answer: C. How the quantity supplied of one good responds to a change in the price of another good.
Explanation: This measures how the supply of one product is affected by the price changes of a related product.

6. Which factor is NOT a determinant of supply elasticity?
A. Availability of inputs.
B. Flexibility of production processes.
C. Time horizon.
D. Proportion of income spent on the good.
Answer: D. Proportion of income spent on the good.
Explanation: The proportion of income spent on a good is a determinant of demand elasticity, not supply elasticity.

7. If the percentage change in quantity supplied is greater than the percentage change in price, supply is considered
A. Elastic
B. Inelastic
C. Unitary elastic
D. Normal
Answer: A. Elastic
Explanation: Elastic supply means producers respond significantly to price changes, resulting in a larger percentage change in quantity supplied.

8. What does the Income Elasticity of Demand (YED) measure?
A. The responsiveness of quantity demanded to a change in price.
B. The responsiveness of quantity demanded to a change in consumer income.
C. The responsiveness of quantity supplied to a change in consumer income.
D. How the quantity supplied of one good responds to a change in the price of another good.
Answer: B. The responsiveness of quantity demanded to a change in consumer income.

9. Which type of elasticity helps identify if goods are substitutes or complements?
A. Price Elasticity of Demand (PED)
B. Cross-Price Elasticity of Demand (XED)
C. Income Elasticity of Demand (YED)
D. Price Elasticity of Supply (PES)
Answer: B. Cross-Price Elasticity of Demand (XED)

10. If the proportion of income spent on a good is high, what is likely to happen to its demand elasticity?
A. Become more elastic.
B. Become more inelastic.
C. Remain unchanged.
D. Become unitary elastic.
Answer: A. Become more elastic.