#1
2. Which of the following is considered an elastic good?
Gasoline
Salt
Insulin
Toothpaste
#2
5. Which pricing strategy involves setting a high initial price to capture early adopters and then gradually lowering the price?
Penetration pricing
Skimming pricing
Dynamic pricing
Bundle pricing
#3
10. Which of the following is a characteristic of monopolistic competition?
Many sellers, identical products.
Few sellers, differentiated products.
One seller, unique product.
Many sellers, differentiated products.
#4
13. What is a characteristic of a perfectly competitive market?
Product differentiation.
High barriers to entry.
Many buyers and sellers.
Control over market price by individual firms.
#5
15. What is the primary goal of a firm following the profit maximization principle in microeconomics?
Maximizing market share.
Maximizing total revenue.
Maximizing profit per unit.
Minimizing costs.
#6
19. What is the purpose of a price floor in a market?
To set a maximum price for a good or service.
To encourage competition among sellers.
To prevent prices from falling below a certain level.
To promote price elasticity.
#7
1. What is 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 percentage change in price divided by the percentage change in quantity demanded.
The quantity demanded multiplied by the price.
#8
4. When demand is inelastic, what happens to total revenue when prices increase?
Total revenue increases.
Total revenue decreases.
Total revenue remains constant.
It depends on the specific market.
#9
6. What is the cross-price elasticity of demand?
The percentage change in quantity demanded divided by the percentage change in price.
The percentage change in quantity demanded of one good divided by the percentage change in the price of another good.
The total revenue divided by the quantity demanded.
The quantity demanded multiplied by the price.
#10
8. What is the income elasticity of demand for normal goods?
Positive
Negative
Zero
Can be positive or negative
#11
12. Which factor does NOT affect the price elasticity of demand?
Availability of substitutes.
Necessity vs. luxury.
Income level of consumers.
Number of producers in the market.
#12
14. Which pricing strategy focuses on setting prices just below even-dollar or even-euro amounts?
Odd pricing.
Penetration pricing.
Bundle pricing.
Price skimming.
#13
3. What is the relationship between price elasticity and total revenue?
They move in the same direction.
They move in opposite directions.
No relationship between them.
Total revenue is always constant.
#14
7. In which scenario is a perfectly elastic demand curve likely to occur?
Necessities with few substitutes.
Luxuries with many substitutes.
Goods with inelastic demand.
Goods with elastic demand.
#15
9. When might a company use price discrimination as a pricing strategy?
In a perfectly competitive market.
When there is no competition.
To maximize profits by charging different prices to different customer groups.
Only in monopolistic markets.
#16
11. What does the price elasticity value of -0.75 indicate?
Perfectly inelastic demand.
Relatively inelastic demand.
Relatively elastic demand.
Perfectly elastic demand.
#17
16. If the cross-price elasticity of demand is negative, what can be inferred about the two goods?
They are substitutes.
They are complements.
They are normal goods.
They are inferior goods.
#18
20. In a monopolistic market, what is the relationship between price and quantity sold?
Price is inversely related to quantity sold.
Price is directly related to quantity sold.
No relationship between price and quantity sold.
Quantity sold is irrelevant in a monopolistic market.