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Basic Quiz
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1
What is the effect on total revenue if demand is elastic and price rises?
A)Total revenue will fall.
B)Total revenue will rise.
C)Quantity demanded will rise.
D)Supply will rise.
2
What is the effect of a rise in income on the demand for a product?
A)It will rise if the product is an inferior product.
B)It will rise if the product is a normal product.
C)It will fall if the product is a normal product.
D)It will fall whether it is a normal or inferior product.
3
What is the effect of the imposition of a sales tax?
A)The supply curve will shift to the left.
B)The supply curve will shift to the right.
C)The demand curve will shift to the left.
D)The demand curve will shift to the right.
4
What is the elasticity of supply of seats for a one-night concert in an auditorium?
A)It is elastic.
B)It is inelastic.
C)It is perfectly inelastic.
D)It is perfectly elastic.
5
What is the effect if government increases the excise tax on a product that has an inelastic demand?
A)Tax revenue will rise.
B)Tax revenue will fall.
C)The price of the product will rise, but the quantity traded will remain unchanged.
D)The price of the product will rise, and the quantity traded will rise.
6
What is a normal good?
A)It is a good whose income elasticity of demand is less than zero.
B)It is a good whose demand will rise as income rises.
C)It is a good that has many substitutes.
D)It is a necessity.
7
Under which of the following situations will total revenue rise?
A)If elasticity is >1 and price falls
B)If elasticity is >1 and price rises
C)If elasticity is <1 and price falls
D)If elasticity = 1 and price falls
8
If a product has many substitutes, which of the following statements is correct?
A)Its income elasticity is high.
B)It is likely that it is an inferior product.
C)Its supply elasticity is high.
D)Its price elasticity of demand is high.
9
If people spend a large percentage of their income on a particular product, which of the following statements is true?
A)The product has a large number of substitutes.
B)The price elasticity of demand for the product is high.
C)The income elasticity of demand for the product is low.
D)The elasticity of supply for the product is low.
10
What will cause the price elasticity of demand for a product to be high?
A)A low percentage of income is spent on the product.
B)There are a small number of available substitutes.
C)The elasticity of supply for the product is high.
D)A long period is used to measure elasticity.
11
How is a firm's total revenue calculated?
A)Price times average revenue
B)Price times quantity sold
C)Average revenue times quantity produced
D)Quantity demanded times quantity supplied
12
What is the price elasticity of demand coefficient?
A)A number that measures the responsiveness of quantity demanded to a change in price
B)A number that measures the responsiveness of quantity demanded to a change in demand
C)A number that measures the responsiveness of price to a change in the quantity demanded
D)A number that measures the responsiveness of price to a change in demand
13
How is the cross-elasticity of demand calculated?
A)By dividing the change in the quantity demanded of product A by the change in the price of product B
B)By dividing the percentage change in the quantity demanded of product A by the percentage change in the price of product B
C)By dividing the change in the price of product A by the change in the quantity demanded of product B
D)By dividing the percentage change in the price of product A by the percentage change in the quantity demanded of product B





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