#1
What does elasticity measure in economics?
The responsiveness of quantity demanded to changes in price
The total revenue of a firm
The level of consumer satisfaction
The cost of production
#2
Which of the following goods is likely to have the most elastic demand?
Salt
Insulin
Luxury cars
Toilet paper
#3
Which of the following factors affects the price elasticity of demand?
The availability of close substitutes
Income of consumers
The time period under consideration
All of the above
#4
What does a negative income elasticity of demand indicate?
The good is a normal good
The good is an inferior good
The good is a luxury good
The good has inelastic demand
#5
Which of the following factors does NOT influence the price elasticity of demand?
The availability of substitutes
The proportion of income spent on the good
The time period considered
The production costs of the good
#6
What is the formula for calculating price elasticity of demand?
(Change in Quantity Demanded) / (Change in Price)
(Change in Price) / (Change in Quantity Demanded)
(Initial Quantity Demanded) / (New Quantity Demanded)
(Initial Price) / (New Price)
#7
If the price elasticity of demand for a good is -2, what does it indicate?
Demand is perfectly inelastic
Demand is relatively inelastic
Demand is relatively elastic
Demand is perfectly elastic
#8
If the cross-price elasticity between two goods is -1, what kind of goods are they?
Perfect complements
Perfect substitutes
Unrelated goods
Normal goods
#9
How does elasticity affect the incidence of a tax?
Elastic demand reduces the tax burden on consumers
Inelastic demand reduces the tax burden on producers
Elastic demand shifts the tax burden more to producers
Inelastic demand shifts the tax burden more to consumers
#10
What is the formula for calculating income elasticity of demand?
(Change in Quantity Demanded) / (Change in Price)
(Change in Quantity Demanded) / (Change in Income)
(Change in Income) / (Change in Quantity Demanded)
(Change in Price) / (Change in Income)
#11
What does a cross-price elasticity of 0.5 between two goods imply?
The goods are complements
The goods are substitutes
There is no relationship between the goods
The goods are inferior
#12
What does the concept of elasticity of supply measure?
The responsiveness of quantity demanded to changes in price
The responsiveness of quantity supplied to changes in price
The responsiveness of demand to changes in income
The responsiveness of demand to changes in the price of related goods
#13
How does the elasticity of supply influence the incidence of a subsidy?
Elastic supply reduces the subsidy burden on producers
Inelastic supply increases the subsidy burden on consumers
Elastic supply shifts the subsidy burden more to consumers
Inelastic supply shifts the subsidy burden more to producers
#14
What does a cross-price elasticity of -0.2 between two goods imply?
The goods are substitutes
The goods are complements
There is no relationship between the goods
The goods are inferior
#15
If the price elasticity of demand is -1.5, by what percentage will quantity demanded change if price increases by 10%?