## IF THE PRICE OF AN ITEM CHANGES BY 8% AND QUANTITY SUPPLIED CHANGES FROM 600 UNITS TO 660 UNITS, THE PRICE ELASTICITY OF SUPPLY IS

A. 0.80 B. 1.25 ✓ C. 2.00 D. 10.00 The answer to the question is: B. 1.25 The price elasticity of supply measures the responsiveness of the quantity supplied of a good to a change in its price. It…

## IF QUANTITY SUPPLIED IS CONSTANT IRRESPECTIVE OF PRICE CHANGES, THE SUPPLY ELASTICITY IS

A. unitary B. infinity C. fairly elastic D. perfectly inelastic ✓ The answer to the question is: D. perfectly inelastic If the quantity supplied remains constant regardless of changes in price, the supply elasticity is considered perfectly inelastic. This means that…

## IF COMMODITIES X AND Y ARE SUBSTITUTE, THEIR CROSS ELASTICITY OF DEMAND WILL BE

A. One B. positive ✓ C. negative D. zero The answer to the question is: B. positive If commodities X and Y are substitutes, their cross elasticity of demand will be positive. This is because substitutes are goods that can be…

## IF THE QUANTITY DEMANDED OF A COMMODITY INCREASES FROM 20 UNITS TO 30 UNITS WHEN THERE IS AN INCREASE IN PRICE FROM 4.00 DOLLARS TO 5.00 DOLLARS, THE ELASTICITY OF DEMAND IS

The elasticity of demand is a measure of the responsiveness of the quantity demanded of a commodity to a change in its price. It is calculated using the following formula: Elasticity of Demand = Percentage Change in…

## CROSS ELASTICITY OF DEMAND

It is the degree of responsiveness of demand for one commodity as a result of a change in the price of another. It is the measure of effect of a change in demand for one commodity as…

## INCOME ELASTICITY OF DEMAND

“It is the degree of responsiveness of demand for goods to a change in income”. It is the extent to which demand changes as a result of increase or decrease in income. Additional income is mostly spent…