Economics Mcqs

Question 1

Mcqs

What is the price elasticity of demand measure of?

Answer 1

It measures the extent to which demand for a product changes due to a change in price

Question 2

Mcqs

What is Price inelastic demand

and what does the graph look like

Answer 2

The demand for a product that is unreponsive to changes in price, mainly because of the lack of substitutes for the product

The line is sloped up towards the Y-axis but its steep

Question 3

Mcqs

What is Price elastic demand

and what does the graph look like

Answer 3

The demand for a product that is responsive to changes in price, usually due to substitutes being available.

The graph is slope up towards the y-axis

Question 4

Mcqs

What is the formula for Price elasticity of demand

Answer 4

Percentage change in quantity demanded/Percentage change in price

Question 5

Mcqs

What is the unitary price elasticity

and what does the graph look like

Answer 5

It occurs when the percentage change in the quantity demanded is proportional to the change in price, so there is no change in the sales revenue

It is a L shape curve

Question 6

Mcqs

What are the determinents of price elasticity of demand

9 (name all)

Answer 6

• Advertising and loyalty
• Breadth of definition of the product
• Costs of switching
• Durability
• Time
• Habits, addictions, fashions and tastes
• Income
• Necessity
• Substitution

Abbreviated as ABCD -THINS

Question 7

Mcqs

Define absolute poverty

Answer 7

It exist when there is extreme outright poverty, i.e income equal to or less than $1.25 per day.

Question 8

What is relative poverty

Answer 8

Comparative measure of poverty, referring to those who have a lower standard of living in comparison to the average member of society

Question 9

What is relative poverty

Answer 9

Comparative measure of poverty, referring to those who have a lower standard of living in comparison to the average member of society