#1
What does elasticity measure in economics?
The responsiveness of quantity demanded to changes in price
The total revenue of a firm
The government's tax revenue
The level of unemployment
#2
Which of the following goods is likely to have the most elastic demand?
Salt
Gasoline
Luxury cars
Insulin
#3
What happens to the tax burden when demand is perfectly inelastic?
Consumers bear all of the tax burden
Producers bear all of the tax burden
The tax burden is shared equally between consumers and producers
The tax burden disappears
#4
If a tax is imposed on a good and the supply is perfectly elastic, who bears the burden of the tax?
Consumers
Producers
Both consumers and producers share the burden equally
The government
#5
What is the relationship between the price elasticity of demand and total revenue?
They move in the same direction
They move in opposite directions
Total revenue is unaffected by elasticity
Total revenue always increases
#6
If the cross-price elasticity of demand between two goods is positive, what does it indicate?
The goods are complements
The goods are substitutes
The goods are unrelated
The goods are inferior
#7
What does it mean if the income elasticity of demand for a good is greater than 1?
The good is a normal good
The good is an inferior good
The good is a luxury good
The good is a necessity
#8
Which of the following is an example of a good with perfectly elastic demand?
Insulin
Bottled water
Land
Gasoline
#9
What is the formula for calculating 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
#10
What is the formula for calculating income elasticity of demand?
Percentage change in quantity demanded / Percentage change in income
Percentage change in income / Percentage change in quantity demanded
Change in quantity demanded / Change in income
Change in income / Change in quantity demanded
#11
In the long run, how does the elasticity of supply tend to change?
It becomes more elastic
It becomes less elastic
It remains constant
It becomes perfectly inelastic
#12
What is the tax incidence of a tax on a perfectly inelastic demand curve?
Entirely on consumers
Entirely on producers
Shared equally between consumers and producers
On the government
#13
What is the formula for calculating cross-price elasticity of demand?
Percentage change in quantity demanded of good A / Percentage change in price of good B
Percentage change in price of good A / Percentage change in quantity demanded of good B
Change in quantity demanded of good A / Change in price of good B
Change in price of good A / Change in quantity demanded of good B
#14
If a tax is levied on a good and the demand is perfectly elastic, who bears the burden of the tax?
Consumers
Producers
Both consumers and producers share the burden equally
The government