#1
2. Which of the following indicates an inelastic demand?
Price elasticity of -0.8
Price elasticity of 1.2
Price elasticity of 0.5
Price elasticity of -1.5
#2
10. If a good has a high income elasticity (>1), how is it classified?
Normal good.
Inferior good.
Luxury good.
Giffen good.
#3
1. What is price elasticity of demand?
The percentage change in quantity demanded divided by the percentage change in price.
The absolute change in quantity demanded divided by the absolute change in price.
The total revenue divided by the quantity demanded.
The percentage change in price divided by the percentage change in quantity demanded.
#4
4. How does an increase in income affect the demand for normal goods?
Increases demand.
Decreases demand.
No effect on demand.
Increases supply.
#5
7. In the context of price elasticity, what is the midpoint formula used for?
Calculating the percentage change in quantity demanded.
Calculating the percentage change in price.
Avoiding biased estimation of elasticity.
Determining if a good is normal or inferior.
#6
9. What is the primary determinant of the price elasticity of demand for a good?
Availability of substitutes.
Total revenue from the good.
Government regulations.
Production cost of the good.
#7
11. Which of the following goods is likely to have an inelastic demand?
Luxury cars.
Generic medicines.
Smartphones.
Movie tickets.
#8
13. What happens to the price elasticity of demand as you move along a linear demand curve?
It remains constant.
It increases.
It decreases.
It fluctuates unpredictably.
#9
14. If the percentage change in quantity demanded is greater than the percentage change in price, what type of elasticity does the demand exhibit?
Inelastic.
Elastic.
Unitary elastic.
Perfectly elastic.
#10
3. What does a cross-price elasticity of 0.7 between two goods imply?
The goods are substitutes.
The goods are complements.
The goods are unrelated.
The goods are luxury items.
#11
5. If the price elasticity of demand is -2.5, how will total revenue change when the price decreases?
Total revenue will increase.
Total revenue will decrease.
Total revenue will remain constant.
Total revenue cannot be determined.
#12
6. What does a price elasticity of demand equal to -1.5 signify?
Perfectly inelastic demand.
Perfectly elastic demand.
Relatively elastic demand.
Relatively inelastic demand.
#13
8. If the demand for a good is perfectly elastic, what does it mean for the price and quantity?
Price can change, but quantity remains constant.
Quantity can change, but price remains constant.
Both price and quantity are constant.
Both price and quantity can change.
#14
12. If the cross-price elasticity of two goods is negative, what can be concluded about their relationship?
They are substitutes.
They are complements.
They are unrelated.
They are both inferior goods.
#15
15. How does the availability of close substitutes affect the price elasticity of demand?
Increases elasticity.
Decreases elasticity.
No effect on elasticity.
Makes demand perfectly elastic.
#16
16. What is the relationship between price elasticity and total revenue for elastic demand?
As price increases, total revenue increases.
As price increases, total revenue decreases.
As price decreases, total revenue increases.
As price decreases, total revenue decreases.