#1
What does price elasticity of demand measure?
The percentage change in quantity demanded given a one percent change in price.
The percentage change in price given a one percent change in quantity demanded.
The total revenue change given a price change.
The change in quantity demanded given a change in income.
#2
If the price elasticity of demand is greater than 1, the demand is considered to be:
Inelastic
Unitary elastic
Elastic
Perfectly elastic
#3
If the price of a good increases by 10% and the quantity demanded decreases by 5%, what is the price elasticity of demand?
#4
Which of the following goods is likely to have the highest price elasticity of demand?
Salt
Insulin (for diabetic patients)
Diamonds
Gasoline
#5
What does a price elasticity of demand of -0.8 indicate?
A 1% decrease in price will result in an 0.8% decrease in quantity demanded.
A 1% decrease in price will result in a 0.8% increase in quantity demanded.
A 1% increase in price will result in an 0.8% decrease in quantity demanded.
A 1% increase in price will result in a 0.8% increase in quantity demanded.
#6
Which of the following goods is most likely to have perfectly elastic demand?
Bread
Water
Ferraris
Medicines
#7
What is the formula for cross-price elasticity of demand?
Percentage change in quantity demanded of good X / Percentage change in price of good Y
Percentage change in price of good X / Percentage change in quantity demanded of good Y
Percentage change in quantity demanded of good X * Percentage change in price of good Y
Percentage change in price of good X * Percentage change in quantity demanded of good Y
#8
If the cross-price elasticity of demand between two goods is positive, what does it indicate about the relationship between those goods?
They are substitutes.
They are complements.
They are unrelated.
They are both inferior goods.
#9
What does a price elasticity of demand equal to zero imply?
The good is a luxury.
The good is a necessity.
The demand is perfectly inelastic.
The demand is perfectly elastic.
#10
If the income elasticity of demand for a good is negative, what type of good is it?
Normal good
Inferior good
Veblen good
Giffen good
#11
What is the formula to calculate the price elasticity of demand?
Percentage change in price / Percentage change in quantity demanded
Percentage change in quantity demanded / Percentage change in price
Change in price / Change in quantity demanded
Change in quantity demanded / Change in price
#12
If the cross-price elasticity of demand between two goods is negative, what does it imply about the relationship between those goods?
They are substitutes.
They are complements.
They are unrelated.
They are both inferior goods.
#13
Which of the following is not a determinant of price elasticity of demand?
Availability of substitutes
Necessity of the good
Income level of consumers
Time horizon
#14
When does the cross-price elasticity of demand equal zero?
When the goods are complements.
When the goods are substitutes.
When the goods are unrelated.
When the price of one good changes but the quantity demanded of the other good remains constant.
#15
What is the main implication of a perfectly inelastic demand curve?
Consumers are very responsive to price changes.
Price changes have no effect on quantity demanded.
The demand curve is horizontal.
The demand curve is vertical.
#16
What does a price elasticity of demand of -1.5 indicate?
The demand is perfectly elastic.
The demand is perfectly inelastic.
The demand is unitary elastic.
The demand is inelastic.
#17
What does a price elasticity of demand of 0.1 indicate?
The demand is perfectly elastic.
The demand is perfectly inelastic.
The demand is unitary elastic.
The demand is inelastic.