The Theory of Demand
Economics · 50 practice questions
Meaning and determinants of demand; demand schedules and curves; change in quantity demanded vs. change in demand; types of demand (composite, derived, competitive, joint); price, income and cross elasticity of demand and their measurement; importance of elasticity to consumers, producers and government.
- Identify the factors determining demand.
- Interpret demand curves from demand schedules.
- Differentiate between a change in quantity demanded and a change in demand.
- Compare types of demand.
- Compute and interpret elasticity coefficients.
Try a few questions
- Practice question 1
The price of good A rises by 10%, causing the quantity demanded of good B to rise by 5%. The cross elasticity of demand for B with respect to A is
- A.2.0
- B.1.5
- C.0.5
- D.0.05
Show the answer
C. 0.5
Cross elasticity = %ΔQb/%ΔPa = 5/10 = 0.5.
- Practice question 2
Using the same schedule, the price elasticity of demand (absolute value) between ₦12 and ₦18 is
- A.0.5
- B.2.0
- C.1.0
- D.0.25
Show the answer
A. 0.5
%ΔQ = −25%, %ΔP = 50%; elasticity = 25/50 = 0.5.
- Practice question 3
Using the same schedule, total revenue at a price of ₦5 is
- A.₦500
- B.₦2,000
- C.₦200
- D.₦1,000
Show the answer
D. ₦1,000
TR = P × Q = 5 × 200 = ₦1,000.
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