Elasticity of Demand Quiz

Test your knowledge on price elasticity, determinants, and implications. Understand how elasticity influences demand and revenue.

#1

2. If the price of a good increases by 10% and the quantity demanded decreases by 5%, what is the price elasticity of demand?

0.5
2
1
-0.5
#2

5. When demand is inelastic, how does a change in price affect total revenue?

Total revenue increases
Total revenue decreases
Total revenue remains unchanged
It depends on the specific circumstances
#3

9. If the percentage change in quantity demanded is greater than the percentage change in price, the demand is:

Elastic
Inelastic
Unitary elastic
Perfectly elastic
#4

14. If the income elasticity of demand for a good is negative, it indicates that the good is:

Normal
Inferior
Luxury
Necessity
#5

15. What happens to total revenue when the price of a perfectly elastic good is increased?

Total revenue increases
Total revenue decreases
Total revenue remains unchanged
It cannot be determined
#6

20. If the percentage change in quantity demanded is equal to the percentage change in price, the demand is considered:

Elastic
Inelastic
Unitary elastic
Perfectly elastic
#7

1. What is the definition of price elasticity of demand?

The percentage change in quantity demanded divided by the percentage change in price.
The total revenue divided by the quantity demanded.
The change in quantity demanded divided by the change in income.
The price multiplied by the quantity demanded.
#8

4. If the cross-price elasticity of demand between two goods is positive, it implies that they are:

Complementary goods
Substitute goods
Inferior goods
Normal goods
#9

7. How is the midpoint formula for price elasticity of demand calculated?

((Q2 - Q1) / (Q2 + Q1)) / ((P2 - P1) / (P2 + P1))
((Q2 - Q1) / (Q1 + Q2)) / ((P2 - P1) / (P1 + P2))
((P2 - P1) / (P2 + P1)) / ((Q2 - Q1) / (Q2 + Q1))
((P2 - P1) / (P1 + P2)) / ((Q2 - Q1) / (Q1 + Q2))
#10

8. Inelastic goods are generally associated with:

Necessities
Luxuries
Perfect substitutes
Perfect complements
#11

12. If the cross-price elasticity of demand between two goods is negative, they are considered:

Complementary goods
Substitute goods
Inferior goods
Normal goods
#12

13. Which of the following is a determinant of price elasticity of demand?

Consumer preferences
Government regulations
Producer surplus
Market equilibrium
#13

3. Which of the following goods is likely to have a more elastic demand?

Salt
Luxury cars
Insulin
Gasoline
#14

6. If the price elasticity of demand is perfectly inelastic, what is the numerical value of elasticity?

0
1
Infinity
Less than 1
#15

10. Which factor does NOT influence the elasticity of demand?

Availability of substitutes
Time horizon
Market structure
Production cost
#16

11. The demand for which of the following goods is likely to be more elastic in the short run than in the long run?

Coffee
Houses
Gasoline
Medical services
#17

16. The concept of cross-price elasticity of demand is most relevant for which type of goods?

Normal goods
Inferior goods
Substitute goods
Complementary goods
#18

18. Which factor is most likely to increase the elasticity of demand for a good?

Fewer substitutes available
Shorter time horizon
Necessity rather than luxury
A narrow market definition

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