QUESTION 2 Price elasticity of demand is a measure of the responsiveness of quan
ID: 1154726 • Letter: Q
Question
QUESTION 2 Price elasticity of demand is a measure of the responsiveness of quantity demanded to changes in O a. price O b. interest rates O c. demand. o d.supply. QUESTION 22 At a price below the equilibrium price, there is O a. a surplus O b. a shortage O c. excess supply O d. sub-equilibrium. e.none of the above QUESTION 23 The fundamental reason why most supply curves are upward sloping is that a. higher production raises the opportunity costs of production and so price must rise to induce more output. O b. a higher price never reduces quantity supplied by enough to lower total revenue and so higher production is motivated O c. consumers substitute lower-priced goods for higher-priced goods o d. the quantity supplied increases as more firms enter the market. QUESTION 24 Price elasticity of supply measures the responsiveness of to changes in a. quantity supplied: income O b. quantity supplied; price O c. quantity supplied, quantity demanded O d. income, quantity demanded e.none of the above QUESTION 25 If the demand for a good is perfectly inelastic, then a, the percentage change in quantity demanded is equal to the percentage change in price o b. quantity demanded is extremely responsive to changes in price O c. quantity demanded is not responsive to changes in price o d. the percentage change in quantity demanded is less than the percentage change in price e. the percentage change in quantity demanded is greater than the percentage change in priceExplanation / Answer
21. Ans : a ) price .
Explanation : Price elasticity of demand shows an inverse relationship between price and quantity demanded.
22. Ans : b ) shortage
Explanation :
At a price below the equilibrium price , quantity demanded is greater than quantity supplied. It leads to shortage.
23. Ans: a ) higher production raises the oppertunity costs of production and so price must rise to induce more output.
24. Ans :b ) quantity supplied ; price
Explanation:
Price elasticity of supply shows a direct relationship between price and quantity supplied.
25. Ans: c ) quantity demanded is not responsive to changes in price.
Explanation:
Demand for a good is perfectly inelastic means there is no change in quantity demanded whether price increses or decreses.