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| 1 | |
If price elasticity of demand is -3, then: |
| | A) | Percentage change in quantity demanded is less than percentage change in price |
| | B) | Percentage change in quantity demanded is greater than percentage change in price |
| | C) | Percentage change in quantity demanded is equal to percentage change in price |
| | D) | None of the above |
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| 2 | |
If we are currently at point A on the demand curve, which has a y-coordinate of 10, an x-coordinate of 4, and a slope of - 5, then price elasticity of demand is: |
| | A) | -0.5 |
| | B) | -0.125 |
| | C) | -0.08 |
| | D) | -5 |
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| 3 | |
The higher the price, demand is: |
| | A) | More inelastic |
| | B) | Unit elastic |
| | C) | More elastic |
| | D) | None of the above |
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| 4 | |
Demand is more elastic when: |
| | A) | The good has fewer substitutes |
| | B) | The good constitutes a large share of the budget |
| | C) | The market has a shorter time to adjust to a price change |
| | D) | The good is a necessity |
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| 5 | |
When demand is elastic, an increase in price results in: |
| | A) | An increase in revenue |
| | B) | Revenue stays the same |
| | C) | A decrease in revenue |
| | D) | None of the above |
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| 6 | |
When cross price elasticity of demand is positive, then the good in question is a: |
| | A) | Normal good |
| | B) | Inferior good |
| | C) | Complementary good |
| | D) | Substitute good |
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| 7 | |
Holding all else constant, if we reduce the price elasticity of demand by half, then we should expect the slope to: |
| | A) | Double |
| | B) | Reduce by half |
| | C) | Reduce by one fourth |
| | D) | Not change |
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| 8 | |
If the supply curve is a vertical line, then price elasticity of supply is: |
| | A) | Perfectly elastic |
| | B) | Unit elastic |
| | C) | Perfectly inelastic |
| | D) | Elastic |
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| 9 | |
Assume that good A is a normal good and good B is an inferior good, then their income elasticities are: |
| | A) | Both positive |
| | B) | Both elastic |
| | C) | Both negative |
| | D) | Have opposite signs |
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| 10 | |
If P1 = 1 and Q1 = 5, and if P2 = 3 and Q2 = 3, then price elasticity of demand using the midpoint formula is: |
| | A) | -2 |
| | B) | -0.5 |
| | C) | -0.2 |
| | D) | -1 |
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