Economics MCQ: Understanding Price Elasticity of Demand
The question asks for the term that represents the ratio of the percentage change in the quantity demanded of a good to the percentage change in its price.
- This ratio is the definition of price elasticity of demand. It measures how sensitive the quantity demanded is to a change in the price of that good.
Formula for Price Elasticity of Demand
Mathematically, it is expressed as:
Price Elasticity of Demand ($E_d$) = $\frac{\text{Percentage Change in Quantity Demanded}}{\text{Percentage Change in Price}} = \frac{\% \Delta Q_d}{\% \Delta P}$
Analyzing Other Options
- Production Function: This relates inputs to outputs in production, not demand response to price.
- Price Elasticity of Supply: This measures the responsiveness of quantity supplied to price changes, not quantity demanded.
- Perfect Competition: This is a market structure, not a measure of responsiveness.
Therefore, the correct term is price elasticity of demand.
Similar Questions
- The sum of total fixed cost and total variable cost is known as:
- The law of comparative advantage is popularly attributed to ________.
- A Giffen good is related to which of the following?
Which of the following is an example of structural unemployment?
- ______ in economics is a curve that, when plotted on a graph, shows all the combinations of two factors that produce a given output.
- Which among the following organisations is the best example of an agreement between oligopolists?
- The curve that shows the levels of output that a profit maximising firm would choose to produce at different values of the market price is called the firm's ______.
- When a proportional increase in all input results in an increase in output by a larger proportion, the production function is said to display ______.
- Complete the sentence using the options given below.
The short-run marginal cost curve is 'U'-shaped due to ______. - The Total Revenue Curve of a firm shows the relationship between the _______ made by the firm and the output level of the firm.
Important Questions from Microeconomics
Which of the following statement is correct?
I. Indifference curves are sloping from left to right.
II. Higher indifference curve gives a higher level of utility.
Match List I with List II:
List- I
Shape of revenue curve of the firm
List – II
Market structure
A.
Kinked revenue-curve (I)
Monopolistic competition B.
Infinitely elastic straight line curve (II)
Perfect competition C.
Relatively less elastic curve (III)
Oligopoly D.
Relatively high elastic curve (IV)
Monopoly.
Choose the correct answer from the options given below -Marginal revenue of a firm is constant throughout under _________.
The cost curve which is a rectangular hyperbola is:
Rare of inflation is equal to:
[A = Price Index]
