Post Utme Skyline University 2017 Economics Question 1

Practice objective / multiple choice question 1 from the 2017 Post Utme Skyline University Economics examination.

Post Utme Skyline University 2017 Economics Objective / Multiple Choice
Question 1 POST_UTME_SKYLINE_UNIVERSITY • 2017 • ECONOMICS • objective
Post Utme Skyline University 2017 Economics Question 1 diagram

U\sing the concept of elasticity of demand, explain why a price increase of 10% in a perfectly competitive market may lead to a decrease in quantity demanded of 5%.

Answer Options

A. The law of demand states that as price increases, quantity demanded decreases.
B. The elasticity of demand is unit elastic, so a 10% price increase will lead to a 10% decrease in quantity demanded.
Correct Answer C. The demand curve is inelastic, so a 10% price increase will lead to a less than 10% decrease in quantity demanded.
D. The demand curve is perfectly elastic, so a 10% price increase will lead to a greater than 10% decrease in quantity demanded.
Correct Answer
C
Correct Option:
The demand curve is inelastic, so a 10% price increase will lead to a less than 10% decrease in quantity demanded.

About This Question

This is Post Utme Skyline University 2017 Economics Question 1. It is one of the objective questions from the 2017 Post Utme Skyline University Economics examination.

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