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Determinants of Price Elasticity of Demand quiz #1 Flashcards

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Determinants of Price Elasticity of Demand quiz #1
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  • Which factor most directly influences how much money consumers are willing to borrow in relation to the price elasticity of demand?
    The share of a consumer's budget devoted to a purchase most directly influences borrowing; larger purchases with more elastic demand may require more borrowing.
  • Which of the following is a determinant of demand?
    The availability of close substitutes is a determinant of demand.
  • Which of the following is a determinant of the price elasticity of demand?
    The availability of close substitutes is a key determinant of price elasticity of demand.
  • What three factors determine a product’s price elasticity of demand?
    Availability of close substitutes, whether the product is a necessity or luxury, and the market definition.
  • Which of the following would be considered nonprice determinants of the demand for flour?
    Availability of substitutes, whether flour is considered a necessity or luxury, and the share of budget spent on flour.
  • What three factors affect a product’s price elasticity of demand?
    Availability of close substitutes, time horizon, and the share of the consumer's budget spent on the product.
  • Which of the following is not a determinant of demand?
    The price of the good itself is not a determinant of demand; determinants are factors like substitutes, income, and preferences.
  • What are the major determinants of price elasticity of demand?
    Major determinants are availability of close substitutes, necessities vs. luxuries, market definition, time horizon, and share of budget.
  • Which of the following is a determinant of demand in the market for laptop computers?
    The availability of close substitutes, such as tablets or desktop computers, is a determinant of demand for laptops.
  • Which of the following is not a determinant of the demand for a particular good?
    The price of the good itself is not a determinant; determinants include substitutes, income, and tastes.
  • Which of the following is a determinant of productivity in relation to price elasticity of demand?
    Productivity is not a direct determinant of price elasticity of demand; relevant determinants include substitutes, market definition, and time horizon.
  • Which of the following is a nonprice determinant of demand?
    The availability of close substitutes is a nonprice determinant of demand.
  • Which is not one of the factors that can affect the elasticity of goods?
    Productivity is not a factor that affects the price elasticity of demand.
  • Which one of the following is not a determinant of consumption spending in the context of price elasticity of demand?
    The price of the good itself is not a determinant of consumption spending; determinants include substitutes, necessity, and budget share.
  • Which of the following is a determinant of demand that would cause demand to increase?
    An increase in the number of buyers is a determinant that would cause demand to increase.
  • How does the price range affect the elasticity of demand for a product?
    Products that take up a larger share of a consumer's budget (higher price range) tend to have more elastic demand.
  • What is the most obvious factor affecting demand elasticity?
    The availability of close substitutes is the most obvious factor affecting demand elasticity.
  • What are the determinants of demand?
    Determinants of demand include availability of substitutes, necessity vs. luxury, market definition, time horizon, and share of budget.
  • A change in the number of buyers is a determinant of market demand. Explain.
    An increase or decrease in the number of buyers directly affects market demand, shifting the demand curve.
  • A change in the number of buyers is a determinant of market demand. Why?
    Because more buyers in the market increase total demand, while fewer buyers decrease it.
  • According to studies, is the demand for gasoline generally elastic or inelastic in the short run, and why?
    The demand for gasoline is generally inelastic in the short run because consumers cannot easily change their consumption habits or find alternatives quickly.
  • What are the main factors that affect the price elasticity of demand for a product?
    The main factors affecting price elasticity of demand are the availability of close substitutes, whether the good is a necessity or luxury, the definition of the market, the time horizon, and the share of the consumer's budget spent on the good.
  • When can demand be described as inelastic?
    Demand is inelastic when a change in price leads to a relatively smaller change in the quantity demanded, often because the good is a necessity, has few substitutes, or represents a small portion of the consumer's budget.
  • How does the availability of close substitutes influence the price elasticity of demand?
    The more close substitutes a product has, the more elastic its demand will be, because consumers can easily switch to alternatives if the price rises.
  • How does the definition of the market affect the elasticity of demand for a product?
    Narrowly defined markets (like apples) tend to have more elastic demand because there are more substitutes within the broader category, while broadly defined markets (like fruit) have less elastic demand.
  • How does the time horizon impact the price elasticity of demand?
    Demand is usually more inelastic in the short run because consumers cannot quickly change their habits, but becomes more elastic in the long run as consumers find alternatives.
  • What three key factors commonly affect a product’s price elasticity of demand?
    Three key factors are the availability of close substitutes, whether the product is a necessity or luxury, and the share of the consumer's budget spent on the product.
  • Which type of product is likely to have a low level of price elasticity of demand, and why?
    Necessities, such as utilities or gasoline in the short run, are likely to have a low level of price elasticity (inelastic demand) because consumers need them and have few alternatives.