#1
What does the 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 total revenue change divided by the quantity demanded
The percentage change in quantity demanded
The percentage change in price
#2
What type of goods have a price elasticity of demand greater than 1?
Inferior goods
Normal goods
Luxury goods
Unitary elastic goods
Elastic goods
#3
When the percentage change in quantity supplied is less than the percentage change in price, what type of supply exists?
Perfectly elastic supply
Elastic supply
Unitary elastic supply
Inelastic supply
Perfectly inelastic supply
#4
What does the income elasticity of demand measure?
The percentage change in quantity demanded divided by the percentage change in income
The percentage change in income divided by the percentage change in quantity demanded
The total revenue change divided by the income
The percentage change in quantity demanded
The percentage change in income
#5
In which scenario would the cross-price elasticity of demand be positive?
When two goods are substitutes
When two goods are complements
When the price of one good decreases and the quantity demanded of the other good decreases
When the price of one good increases and the quantity demanded of the other good increases
When the price of one good decreases and the quantity demanded of the other good increases
#6
What is the formula for price elasticity of supply?
(Percentage change in quantity supplied / Percentage change in price)
(Percentage change in price / Percentage change in quantity supplied)
(Percentage change in total revenue / Percentage change in quantity supplied)
(Percentage change in price / Percentage change in total revenue)
(Percentage change in quantity supplied / Percentage change in total revenue)
#7
Which of the following goods is most likely to have an inelastic demand?
Gasoline
Designer clothing
Cinema tickets
Luxury cars
Vacation packages
#8
Which of the following factors is likely to cause a decrease in the price elasticity of demand for a good?
An increase in the number of substitutes
An increase in the proportion of income spent on the good
A decrease in the time horizon
An increase in the necessity of the good
An increase in government regulations
#9
If the price of a good increases by 10% and the quantity demanded decreases by 20%, what is the price elasticity of demand?
#10
What is the relationship between price elasticity of demand and total revenue when demand is inelastic?
As price elasticity of demand increases, total revenue increases
As price elasticity of demand decreases, total revenue increases
As price elasticity of demand increases, total revenue decreases
As price elasticity of demand decreases, total revenue decreases
There is no relationship between price elasticity of demand and total revenue
#11
Which of the following goods is likely to have a perfectly inelastic demand?
Bottled water during a severe drought
Luxury watches
Generic medicines
Brand-name smartphones
Homemade cookies
#12
What is the formula for income elasticity of demand?
(Percentage change in quantity demanded / Percentage change in income)
(Percentage change in income / Percentage change in quantity demanded)
(Percentage change in total revenue / Percentage change in income)
(Percentage change in quantity demanded / Percentage change in total revenue)
(Percentage change in income / Percentage change in total revenue)
#13
If the price elasticity of demand for a good is -2, what does this indicate?
Demand is perfectly inelastic
Demand is elastic
Demand is unitary elastic
Demand is inelastic
Demand is perfectly elastic
#14
Which of the following factors influences the price elasticity of supply?
Availability of raw materials
Technological advancements
Production time
Number of firms in the industry
All of the above
#15
Which of the following factors does NOT affect the price elasticity of demand?
Availability of substitutes
Degree of necessity
Proportion of income spent on the good
Time horizon
Government regulations
#16
What does a perfectly elastic supply curve look like?
A vertical line
A horizontal line
A downward sloping line
A straight line with a negative slope
A curve with varying elasticity
#17
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 A) * (Percentage change in price of Good B / Percentage change in quantity demanded of Good B)
(Percentage change in price of Good A / Percentage change in quantity demanded of Good A) * (Percentage change in quantity demanded of Good B / Percentage change in price of Good B)
(Percentage change in price of Good A / Percentage change in price of Good B) * (Percentage change in quantity demanded of Good A / Percentage change in quantity demanded of Good B)
(Percentage change in quantity demanded of Good A / Percentage change in quantity demanded of Good B) * (Percentage change in price 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) / (Percentage change in quantity demanded of Good A * Percentage change in price of Good B)
#18
Which of the following statements about perfectly inelastic demand is true?
The quantity demanded remains constant regardless of changes in price
The percentage change in quantity demanded equals the percentage change in price
The price elasticity of demand is zero
The demand curve is vertical
The demand curve is horizontal
#19
What happens to total revenue when demand is elastic and price increases?
Total revenue decreases
Total revenue increases
Total revenue remains constant
Total revenue fluctuates
Total revenue cannot be determined
#20
Which of the following scenarios would result in a perfectly elastic demand?
When consumers have many substitutes available
When the price changes have no effect on quantity demanded
When consumers are insensitive to price changes
When the quantity demanded is extremely sensitive to price changes
When the demand curve is vertical
#21
Which of the following is a characteristic of perfectly elastic demand?
Consumers are very sensitive to price changes
The quantity demanded remains constant regardless of price changes
The demand curve is vertical
The demand curve is horizontal
The price elasticity of demand is greater than 1
#22
Which of the following scenarios would result in a perfectly inelastic supply?
When producers can easily adjust production levels
When the quantity supplied is extremely sensitive to price changes
When there are no substitutes available for the good
When the price changes have no effect on quantity supplied
When the supply curve is horizontal
#23
What is the key determinant of the price elasticity of supply?
Availability of substitutes
Time horizon
Proportion of income spent on the good
The ability of producers to respond to price changes
Income level
#24
What does a price elasticity of supply equal to zero signify?
Supply is perfectly elastic
Supply is perfectly inelastic
Supply is unitary elastic
Supply is elastic
Supply is inelastic