Elasticity and Market Forces Quiz
Test your understanding of elasticity with questions on demand, supply, and market behavior. Discover concepts like price elasticity and its impacts.
#1
What does price elasticity of demand measure?
The percentage change in quantity demanded divided by the percentage change in price.
The percentage change in price divided by the percentage change in quantity demanded.
The percentage change in price multiplied by the percentage change in quantity demanded.
The percentage change in quantity demanded minus the percentage change in price.
#2
What does a perfectly elastic demand curve look like?
Horizontal line
Vertical line
Positively sloped line
Negatively sloped line
#3
Which of the following is true about cross-price elasticity of demand?
It measures the responsiveness of quantity demanded of one good to a change in the price of another good.
It measures the responsiveness of quantity demanded to a change in income.
It measures the responsiveness of quantity demanded to a change in the price of the same good.
It measures the responsiveness of quantity supplied to a change in price.
#4
What does it mean if the price elasticity of supply is greater than 1?
Supply is elastic
Supply is inelastic
Supply is unit elastic
Supply is perfectly elastic
#5
What happens to total revenue when demand is elastic and price increases?
Total revenue increases.
Total revenue decreases.
Total revenue remains constant.
Total revenue may increase or decrease depending on the magnitude of the elasticity.
#6
Which of the following goods is likely to have the most inelastic demand?
Luxury cars
Generic prescription drugs
Gasoline
Smartphones
#7
What is the formula for calculating cross-price elasticity of demand?
(% Change in Quantity Demanded of Good X) / (% Change in Price of Good X)
(% Change in Quantity Demanded of Good X) / (% Change in Price of Good Y)
(% Change in Price of Good Y) / (% Change in Quantity Demanded of Good X)
(% Change in Quantity Supplied of Good X) / (% Change in Price of Good X)
#8
What is the formula for calculating price elasticity of demand?
(Change in quantity demanded / Change in price) * (Average price / Average quantity demanded)
(Change in quantity demanded / Change in price) * (Average quantity demanded / Average price)
(Change in price / Change in quantity demanded) * (Average quantity demanded / Average price)
(Change in price / Change in quantity demanded) * (Average price / Average quantity demanded)
#9
What is the primary determinant of the price elasticity of demand for a good?
Availability of substitutes
Price level
Income level
Advertising expenditure
#10
If the income elasticity of demand for a good is negative, what type of good is it?
Normal good
Inferior good
Luxury good
Necessity good
#11
What does it mean if the price elasticity of supply is 0?
Supply is perfectly elastic.
Supply is perfectly inelastic.
Supply is unit elastic.
Supply is relatively elastic.
#12
Which factor tends to make supply more elastic in the long run?
The ease of substituting factors of production.
The availability of close substitutes for the good.
The proportion of income spent on the good.
The necessity of the good.
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