#1
What does price elasticity of demand measure?
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 percentage change in price divided by the percentage change in quantity demanded
The absolute change in price divided by the absolute change in quantity demanded
#2
If the price elasticity of demand for a good is greater than 1, it means that the good is:
Inferior
Normal
Luxury
Necessity
#3
What is the primary determinant of the price elasticity of supply?
Availability of substitutes
Time horizon
Cost structure of production
Consumer preferences
#4
Which of the following factors does not affect the price elasticity of demand?
Availability of substitutes
Income level
Time horizon
Cost of production
#5
If the cross-price elasticity of demand between two goods is negative, it means that they are:
Complements
Substitutes
Unrelated
Inferior
#6
What is the formula for calculating price elasticity of demand using the midpoint method?
(Change in quantity demanded / Average quantity demanded) / (Change in price / Average price)
(Change in price / Average price) / (Change in quantity demanded / Average quantity demanded)
(Change in quantity demanded / Change in price) / (Average quantity demanded / Average price)
(Change in price / Change in quantity demanded) / (Average price / Average quantity demanded)
#7
When price elasticity of demand is greater than 1, demand is considered to be:
Elastic
Inelastic
Unit elastic
Perfectly elastic
#8
Which of the following scenarios would likely result in a relatively elastic demand for a product?
There are many substitutes available for the product.
The product is considered a necessity.
The product represents a small portion of consumers' budgets.
The price of the product is relatively high.
#9
If the price of a product increases by 20% and the quantity demanded decreases by 10%, what is the price elasticity of demand?
#10
What does a price elasticity of demand of -0.5 indicate?
Demand is perfectly inelastic
Demand is relatively inelastic
Demand is unit elastic
Demand is relatively elastic
#11
Which of the following goods is likely to have the most elastic demand?
Salt
Diamonds
Gasoline
Bread
#12
If the price elasticity of demand for a product is -0.75, what happens to total revenue when the price is increased?
Increases
Decreases
Remains unchanged
Cannot be determined
#13
If the price elasticity of demand for a product is -2, a 10% decrease in price would result in:
A 5% increase in quantity demanded.
A 20% increase in quantity demanded.
A 10% decrease in quantity demanded.
A 20% decrease in quantity demanded.
#14
What does a price elasticity of supply of 0.5 indicate?
Supply is perfectly inelastic.
Supply is relatively inelastic.
Supply is unit elastic.
Supply is relatively elastic.
#15
Which of the following goods is likely to have the most inelastic demand?
Restaurant meals
Luxury cars
Insulin
Designer clothing