#1
What is elasticity of demand?
The responsiveness of quantity demanded to changes in price
The total quantity demanded in the market
The quantity demanded at a specific price point
The slope of the demand curve
#2
Which of the following products is likely to have a more elastic demand?
Salt
Insulin
Coffee
Luxury cars
#3
What is the formula to calculate price elasticity of demand?
ΔQ/ΔP
ΔP/ΔQ
ΔQ/Q ÷ ΔP/P
ΔP/P ÷ ΔQ/Q
#4
If the price elasticity of demand for a good is -2.5, what does this indicate?
Demand is inelastic
Demand is unit elastic
Demand is perfectly elastic
Demand is elastic
#5
What does a price elasticity of 1 indicate?
Elastic demand
Unit elastic demand
Inelastic demand
Perfectly elastic demand
#6
Which of the following is NOT a determinant of supply elasticity?
Time period
Flexibility of inputs
Technology
Availability of substitutes
#7
If the cross-price elasticity of demand between two goods is positive, what does it indicate about their relationship?
They are substitutes
They are complements
They are unrelated
They are inferior goods
#8
What is the formula to calculate income elasticity of demand?
(% Change in Quantity Demanded)/(% Change in Income)
(% Change in Income)/(% Change in Quantity Demanded)
(% Change in Quantity Demanded)/(% Change in Price)
(% Change in Price)/(% Change in Quantity Demanded)
#9
If the price elasticity of demand for a good is 0.6, what does this indicate?
Demand is elastic
Demand is unit elastic
Demand is perfectly inelastic
Demand is inelastic
#10
Which of the following would likely have the most inelastic supply?
Airplanes
Apples
Coffee
Unskilled labor
#11
What does a price elasticity of demand of -0.5 indicate?
Demand is perfectly inelastic
Demand is elastic
Demand is unit elastic
Demand is inelastic
#12
Which of the following goods is likely to have the most elastic demand?
Bread
Diamonds
Gasoline
Salt
#13
If the cross-price elasticity of demand between two goods is negative, what does it indicate about their relationship?
They are substitutes
They are complements
They are unrelated
They are normal goods
#14
What is the concept of point elasticity of demand?
The responsiveness of quantity demanded to a change in price along a linear demand curve
The total quantity demanded in the market
The quantity demanded at a specific price point
The slope of the demand curve
#15
Which of the following products is likely to have a more inelastic demand?
Cigarettes
Air
Restaurant meals
Fashion clothing
#16
What is the formula to calculate price elasticity of supply?
(% Change in Quantity Supplied)/(% Change in Price)
(% Change in Price)/(% Change in Quantity Supplied)
(% Change in Quantity Supplied)/(% Change in Income)
(% Change in Income)/(% Change in Quantity Supplied)
#17
Which of the following factors does NOT affect the elasticity of demand?
Availability of substitutes
Time horizon
Income level of consumers
Price of complementary goods
#18
What happens to total revenue when demand is price inelastic and price increases?
Total revenue increases
Total revenue decreases
Total revenue remains constant
It depends on the price elasticity of supply
#19
What is the main implication of perfectly elastic demand for a firm?
The firm can set any price it desires
The firm has to sell at the market price
The firm has to reduce the price to sell more
The firm can sell any quantity it desires
#20
If the price elasticity of demand for a good is greater than 1, what can you infer about the demand?
Demand is perfectly inelastic
Demand is elastic
Demand is unit elastic
Demand is perfectly elastic
#21
What is the relationship between price elasticity of demand and total revenue when demand is elastic?
Total revenue increases with price
Total revenue decreases with price
Total revenue remains constant
Total revenue is unpredictable
#22
What happens to total revenue when demand is price elastic and price decreases?
Total revenue increases
Total revenue decreases
Total revenue remains constant
It depends on the price elasticity of supply
#23
What is the main implication of perfectly inelastic demand for a firm?
The firm can set any price it desires
The firm has to sell at the market price
The firm has to reduce the price to sell more
The firm can sell any quantity it desires
#24
If the income elasticity of demand for a luxury good is 2.5, what does this indicate?
The good is inferior
The good is normal
The good is a necessity
The good has no relationship with income
#25
In the long run, how does the elasticity of supply tend to change?
It becomes more elastic
It becomes more inelastic
It remains constant
It depends on the type of goods