Price elasticity of demand is measured as: MCQ with Answer and Explanation

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Price elasticity of demand is measured as:

A. change in price divided by change in quantity

B. percentage change in quantity demanded divided by percentage change in price

C. percentage change in price divided by percentage change in quantity demanded

D. change in quantity divided by change in price

Answer: Option B

Solution (By JKSSB Mock Tests)

Price elasticity of demand is the percentage change in quantity demanded divided by the percentage change in price.

This question belongs to: Economy GK Economy Set 1

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Question #1

In the context of demand theory, the law of demand may not hold for:

A. All inferior goods without exception

B. Giffen goods and Veblen goods

C. Necessary goods with elastic demand

D. Normal goods

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Correct Answer: Option B

Explanation:
Giffen goods (strong negative income effect) and Veblen goods (prestige value rising with price) are exceptions to the law of demand.

This question belongs to: Economy GK Economy Set 1

Question #2

Which of the following is NOT a measure of economic inequality?

A. Human Development Index as a pure inequality measure

B. Gini coefficient

C. Lorenz curve

D. Theil index

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Correct Answer: Option A

Explanation:
HDI is a composite measure of development (health, education, income). Gini coefficient, Lorenz curve and Theil index are specific measures of inequality.

This question belongs to: Economy GK Economy Set 1

Question #3

The 'deflation' refers to:

A. a fall in the rate of inflation

B. a fall in unemployment

C. a rise in inflation

D. a sustained fall in the general price level

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Correct Answer: Option D

Explanation:
Deflation is a sustained decline in the general price level.

This question belongs to: Economy GK Economy Set 1

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