#1
Which of the following is an example of a necessity good?
Designer handbag
Smartphone
Bottled water
Luxury car
#2
What does the price elasticity of demand measure?
The responsiveness of quantity demanded to changes in price
The total demand for a product at different price levels
The change in consumer preferences over time
The cost of production for a firm
#3
What is the formula to calculate price elasticity of demand?
Percentage change in quantity demanded / Percentage change in price
Percentage change in price / Percentage change in quantity demanded
Change in quantity demanded / Change in price
Change in price / Change in quantity demanded
#4
Which of the following factors does NOT affect the price elasticity of demand?
Availability of substitutes
Necessity of the good
Time period under consideration
Brand loyalty
#5
What does it mean if the price elasticity of demand is greater than 1?
Demand is perfectly elastic
Demand is unit elastic
Demand is inelastic
Demand is elastic
#6
Which of the following is a characteristic of goods with elastic demand?
A small change in price leads to a large change in quantity demanded
Consumers are not sensitive to price changes
The demand curve is steep
Total revenue increases as price decreases
#7
If the price elasticity of demand for a product is perfectly elastic, what does it mean?
Consumers are not responsive to price changes
Consumers are highly responsive to price changes
Consumers demand the same quantity regardless of price
Consumers are willing to pay any price for the product
#8
What happens to total revenue when the price of a product decreases and demand is elastic?
Total revenue increases
Total revenue decreases
Total revenue remains the same
Total revenue fluctuates unpredictably
#9
If the cross-price elasticity of demand between two goods is positive, what does it indicate?
The goods are substitutes
The goods are complements
The goods are inferior
The goods are normal
#10
What is the relationship between price elasticity of demand and total revenue when demand is inelastic?
They move in the same direction
They move in opposite directions
Total revenue is maximized
Total revenue remains constant
#11
What effect does a shift in the demand curve have on equilibrium price and quantity?
Both price and quantity increase
Price decreases and quantity increases
Price increases and quantity decreases
Both price and quantity decrease
#12
When is the price elasticity of supply perfectly inelastic?
When quantity supplied does not respond to changes in price
When quantity supplied responds substantially to changes in price
When quantity supplied is infinitely responsive to changes in price
When quantity supplied is fixed regardless of price changes
#13
If the income elasticity of demand for a good is negative, what type of good is it?
Inferior good
Normal good
Luxury good
Giffen good
#14
What is the primary determinant of the income elasticity of demand for a good?
Price of the good
Consumer preferences
Consumer income
Availability of substitutes
#15
Which of the following factors is likely to increase the price elasticity of demand for a good?
Fewer substitutes available
Necessity of the good
Shorter time horizon
Income level of consumers
#16
When is the price elasticity of supply perfectly elastic?
When quantity supplied does not respond to changes in price
When quantity supplied responds substantially to changes in price
When quantity supplied is infinitely responsive to changes in price
When quantity supplied is fixed regardless of price changes
#17
Which of the following goods is most likely to have an income elasticity of demand greater than 1?
Generic food items
Luxury cars
Generic medicine
Basic clothing