Question : When demand is perfectly elastic, a decrease in price will result in:
Option 1: No change in quantity demanded.
Option 2: A small change in quantity demanded.
Option 3: A large change in quantity demanded.
Option 4: An unpredictable change in quantity demanded.
Correct Answer: A large change in quantity demanded.
Solution : The correct answer is (c) a large change in quantity demanded.
Perfectly elastic demand means that even a slight change in price will result in an infinite change in the quantity demanded. Consumers are extremely sensitive to changes in price, and any decrease in price will lead to a significant increase in the quantity demanded.
In other words, when demand is perfectly elastic, consumers are willing to buy an unlimited quantity of a good at a lower price. This occurs when there are many available substitutes for the good, and consumers can easily switch to alternatives if the price changes.
On a graph, a perfectly elastic demand curve is represented as a horizontal line, indicating that the quantity demanded can change infinitely in response to any price change.
Question : When demand is perfectly inelastic, a change in price will result in:
Question : When demand is elastic, a decrease in price will result in:
Option 1: A decrease in total revenue.
Option 2: An increase in total revenue.
Option 3: No change in total revenue.
Option 4: An unpredictable change in total revenue.
Question : If the price elasticity of demand for a good is -0.5, then a 10% increase in price will result in a:
Option 1: 0.5% decrease in quantity demanded.
Option 2: 5% decrease in quantity demanded.
Option 3: 0.5% increase in quantity demanded.
Option 4: 5% increase in quantity demanded.
Question : If the price elasticity of demand for a good is 1.2, then a 10% decrease in price will result in a:
Option 1: 1.2% increase in quantity demanded.
Option 2: 12% increase in quantity demanded.
Option 3: 1.2% decrease in quantity demanded.
Option 4: 12% decrease in quantity demanded.
Question : If the price elasticity of demand for a good is -1.5, then a 10% increase in price will result in a:
Option 1: 10% decrease in quantity demanded.
Option 2: 15% decrease in quantity demanded.
Option 3: 10% increase in quantity demanded.
Option 4: 15% increase in quantity demanded.
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