The coefficient of the price elasticity of demand is computed as the absolute value of the percentage change in quantity demanded divided by:
The change in price
The change in supply
The percentage change in supply
The percentage change in price
Correct Answer :
D. The percentage change in price
Price elasticity of demand (PED) is a measure of responsiveness of the quantity of a good demanded to changes in its price. The formula for the coefficient of price elasticity of demand for a good is Ed = % change in quantity demanded % change in price
Related Questions
Robbins definition of economics was criticised by:
Alfred Marshal
Adam Smith
J.B.Clark
Hicks, Longe and Durbin
In cournot model, during the process of adjustment, the number of firms:
Donot change
Change
Both a and b
None of the above
Under the law of variable proportions, the average and the marginal product of the variable factor would ultimately:
Become equal
Decrease
Become constant
Increase
Income-elasticity of demand is expressed as:
% change in quantity demanded % change in income
% change in income % change in quantity demanded
Change in income Change in quantity demanded
None of the above
The vertical demand curve for a commodity shows that its demand is:
Highly elastic
Perfectly inelastic
Fairly elastic
Moderately elastic
As the price of diamond is higher, so it has:
Higher marginal valuation for consumer
Lower marginal cost for producer
Higher marginal cost for producer
Both (a) and (c)
If the commodities X and Y are perfect complements then:
None of the above
Market allocation fundamentally relies upon:
A system of relative prices
A belief that employees work for the good of society
Government ownership of the means of production
Moral incentives to encourage productive efficiency
The equilibrium conditions, MC = MR = AR = AC, will happen:
In the short-run under perfect competition
In the long-run under perfect competition
In the short-run under monopolistic competition
In the long-run under monopolistic competition
The study of economics just in theoretical way is called:
Positive Economics
Normative Economics
Micro Economics
Development Economics
The entry of new firms in cournot model is:
Banned
Free
Partially free
Allowed
Contraction of demand means:
Less quantity demanded at the same price
Less quantity demanded at a higher price
Less quantity demanded at a lower price
None of the above
Returns to scale is a:
Timeless phenomenon
Short run phenomenon
Long run phenomenon
None of the above
Increasing returns is not caused by:
Specialization of labor
Technological advancement
Marketing economics
Varying factor proportions
If the factors have to be employed in a fixed ratio, then the elasticity of substitution under Leontief technology is:
One
Zero
Two
Five
If Cobb-Douglas production function is homogeneous of degree greater than one (n>1), then it shows:
Constant returns to scale
Increasing returns to scale
Decreasing returns to scale
None of the above
Any straight line supply which cuts the x-axis will have:
Zero elasticity
An elasticity greater than one
Unitary elasticity of supply
An elasticity less than one
An increase in the price of the good measured on the horizontal axis causes:
The budget line to get steeper
The budget line to shift parallel to the right
The indifference curve to shift up
The budget line to get flatter
Repetition of a game (Repeated Game):
Yields the same outcome over and over
Can result in behavior that is different from what it would be if the game were played once
Is not possible
Makes cooperative games into noncooperative games
The slope of marshallian demand curve is:
Upward
Vertical
Downward
Horizontal
In income effect, we:
Move to another indifference curve
Move along given indifference curve
Move to lower indifference curve
Move to upper indifference curve
In case of economic bads, an IC can be :
Sloping downward
Sloping upward
Positively sloped
Negatively sloped
In the perfect competition, there is a process of:
Restricted entry and exit of the firms
Semi free exit but absolute free entry
Free entry but restricted exit of the firms
Free entry and free exit of the firms
The market demand shedule is determined by:
Adding up the prices consumers are wiling to pay at each quantity demanded
Multiply each consumers demand curve by the total number of consumers in the market
Adding the quantities denmanded by all consumers at each alternative price
None of the above
The MC curve cuts the AVC and ATC curves:
At different points
At the falling parts of each
At their respective minimums
At the rising parts of each
For a few products such as insulin for diabetics,:
The demand curve can be upward sloping
The price elasticity of demand could be zero
The price elasticity of demand could be greater than one
None of the above
The marginal revenues are derivatives of:
TR function
AR function
MR function
AP function
Who is the founder of classical school of thought?
David Ricardo
Adam Smith
T.R.Malthus
J.S.Mill
Government planners play a central role in allocating resources:
Only under socialism(communism)
Only under capitalism
Under both (a) and (b)
None of the above
Whish of the following represents the average revenue curve of a firm?
The curve representing the cost per unit of output
The demand curve of consumers for the firms product
Total receipts realized by the firm
All of the above