Price Elasticity and Total Revenue Quiz
Test your knowledge on price elasticity of demand with questions about total revenue, elasticity types, and their impacts. Take the quiz now!
#1
What is price elasticity of demand?
A measure of how responsive quantity demanded is to a change in price.
The total revenue earned by a firm.
The percentage change in quantity demanded divided by the percentage change in price.
The change in quantity demanded divided by the change in price.
#2
If demand is elastic, what happens to total revenue when price increases?
Total revenue increases.
Total revenue decreases.
Total revenue remains constant.
Total revenue may increase or decrease depending on the degree of elasticity.
#3
If price elasticity of demand is -0.5, demand is:
Elastic.
Inelastic.
Unitary elastic.
Perfectly elastic.
#4
How is price elasticity of demand calculated?
Percentage change in quantity demanded divided by percentage change in income.
Percentage change in quantity demanded divided by percentage change in price.
Percentage change in price divided by percentage change in quantity demanded.
Percentage change in income divided by percentage change in quantity demanded.
#5
What does a price elasticity of -1.5 indicate about demand?
Demand is elastic.
Demand is inelastic.
Demand is perfectly elastic.
Demand is perfectly inelastic.
#6
Which factor does NOT affect the price elasticity of demand?
Substitutability.
Necessity of the good.
Proportion of income spent on the good.
The cost of production.
#7
When demand is unitary elastic, what is the relationship between price and total revenue?
Total revenue increases.
Total revenue decreases.
Total revenue remains constant.
Total revenue fluctuates.
#8
What is the effect of a perfectly elastic demand on total revenue if price is increased?
Total revenue increases.
Total revenue decreases.
Total revenue remains constant.
Total revenue becomes zero.
#9
If price elasticity of demand is 0, demand is:
Perfectly elastic.
Perfectly inelastic.
Unitary elastic.
Inelastic.
#10
How does the time horizon affect price elasticity of demand?
In the short run, demand tends to be more elastic.
In the long run, demand tends to be more elastic.
The time horizon has no effect on price elasticity of demand.
In the short run, demand tends to be more inelastic.
#11
If a firm faces perfectly elastic demand, what is the effect of increasing price?
Total revenue increases.
Total revenue decreases.
Total revenue remains constant.
Total revenue becomes zero.
#12
What is the relationship between price elasticity of demand and revenue when demand is inelastic?
As price increases, revenue increases.
As price increases, revenue decreases.
As price decreases, revenue increases.
As price decreases, revenue decreases.
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