This quiz works best with JavaScript enabled. Home > Economics > Microeconomics > Elasticity > Elasticity Of Demand – Quiz 2 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Elasticity Of Demand Quiz 2 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. If the cross-price elasticity between two commodities is 1.5, A) The two goods are normal goods. B) The two goods are complements. C) The two goods are luxury goods. D) The two goods are substitutes. Show Answer Correct Answer: D) The two goods are substitutes. 2. A price ceiling is characterized by A) Price set below the current equilibrium market price of a good. B) Price set above current equilibrium market price for a good. C) Shift of the demand curve. D) Shift of the supply curve. Show Answer Correct Answer: A) Price set below the current equilibrium market price of a good. 3. Complementary goods have: A) The same elasticities of demand. B) Very low price elasticities of demand. C) Negative cross price elasticities of demand with respect to each other. D) Positive cross elasticities of demand.with respect to each other. Show Answer Correct Answer: C) Negative cross price elasticities of demand with respect to each other. 4. The price of a commodity is Rs 50 per unit and its quantity demanded is 500 units .Its price rises to Rs 60 per unit and quantity demand falls by 90 units. Calculate Ed A) -2. B) -0.9. C) -0.6. D) -1. Show Answer Correct Answer: B) -0.9. 5. Wheat has seen a decrease in demand of 5%, while the price has increased 7% A) .71 elastic. B) 1.4 inelastic. C) 1.4 elastic. D) .71 inelastic. Show Answer Correct Answer: D) .71 inelastic. 6. The supply of perishable good such as bananas is more price ..... than durable goods such as smart phones because of lack of ..... for perishable goods. A) Inelastic, stock. B) Inelastic, good weather. C) Elastic, good weather. D) Elastic, stock. Show Answer Correct Answer: A) Inelastic, stock. 7. Why do firms need to know whether demand for its product is elastic or inelastic? A) Elasticity of demand can affect a firms total revenues. B) Elasticity of demand can affect consumers. C) Elasticity of demand can affect the economy. D) None of above. Show Answer Correct Answer: A) Elasticity of demand can affect a firms total revenues. 8. What would not affect the position of the demand curve for wigs? A) An increase in wigs worn by television celebrities. B) An increase in incomes. C) A reduction in the price of hairdressing. D) A reduction in the price of wigs. Show Answer Correct Answer: D) A reduction in the price of wigs. 9. What is the price elasticity of demand (PED) for a product for which a 10% price rise reduces sales volume by 5%? A) -5.0. B) -0.2. C) -0.5. D) -2.0. Show Answer Correct Answer: C) -0.5. 10. A 10 percent decrease in income decreases the quantity demanded of scented candles by 3 percent. The income elasticity of demand for scented candles is: A) 3. B) 0.3. C) -3.3. D) -0.3. Show Answer Correct Answer: B) 0.3. 11. A 10 percent increase in income has caused a 5 percent decrease in the quantity demanded. The income elasticity is A) -0.5. B) 0.5. C) -2.0. D) 2.0. Show Answer Correct Answer: A) -0.5. 12. What type of elasticity would electricity have and why A) Inelastic-lots of substitutes. B) Elastic-not many substitutes. C) Inelastic-necessity. D) Elastic-luxury. Show Answer Correct Answer: C) Inelastic-necessity. 13. Elasticity is another word for ..... A) Rigidity. B) Responsiveness. C) Uncertainty. D) Seasonal change. Show Answer Correct Answer: B) Responsiveness. 14. Sales of Ice cream cones from a van are at there most elastic at what time of the year? A) Spring. B) Winter. C) Summer. D) Autumn. Show Answer Correct Answer: B) Winter. 15. A 8% increase in income might lead to a 10% rise in the demand for new kitchens. A) Normal luxury. B) Inferior. C) Normal necessity. D) None of above. Show Answer Correct Answer: A) Normal luxury. 16. A good has unitary price elasticity of demand and at a price of $ 25 it sells 100 000 units. Which price must the firm charge if it wants to sell 125 000 units of the good? A) $ 20. B) $ 15. C) $ 22. D) $ 18. Show Answer Correct Answer: A) $ 20. 17. Consumers demand less of this type of goods when their income increases. A) Furniture. B) Bungalore. C) Low grade rice. D) Salt. Show Answer Correct Answer: C) Low grade rice. 18. Why is knowledge of price elasticity of demand useful? A) To monitor the rate of price inflation. B) To forecast the impact on revenues of different pricing strategies. C) To calculate changes in disposable incomes. D) To estimate the effects of changes in production costs. Show Answer Correct Answer: C) To calculate changes in disposable incomes. 19. Which of the following is not a determinant of the demand sensitivity to price changes? A) Income level. B) The availability of substitute goods. C) The number of producers in the market. D) Time to adjust. Show Answer Correct Answer: C) The number of producers in the market. 20. If the price elasticity of supply of doodads is 0.60 and the price increases by 3 percent, then the quantity supplied of doodads will rise by A) 0.60 percent. B) 0.20 percent. C) 18 percent. D) 1.8 percent. Show Answer Correct Answer: D) 1.8 percent. 21. A consumer buys 5 units of a good at a price of Rs 4 per unit. When price falls to Rs 3 per unit he buys 10 units. Calculate Ed A) -0.5. B) -0.3. C) -0.20. D) -0.16. Show Answer Correct Answer: D) -0.16. 22. The price of good X rises by 10%. As a result, the demand for a complementary good Y changes by 20%. What is the cross elasticity of demand for good Y with respect to good X? A) -2. B) +0.5. C) +2. D) -0.5. Show Answer Correct Answer: A) -2. 23. When YED value is positive and the value is 0.5 A) Normal Good. B) Luxury Good. C) Inferior Good. D) Necessity Goods. Show Answer Correct Answer: A) Normal Good. 24. A consumer buys 50 units of a good at a price of Rs 10 per unit. When the price falls to Rs 5 per unit he buys 100 units. Find out price elasticity by percentage method A) -2.5. B) -2. C) -1. D) -3. Show Answer Correct Answer: B) -2. 25. The Price elasticity of milk is 1.4, therefore we can say that milk is ..... A) Elastic. B) Inelastic. C) Unit elastic. D) None of above. Show Answer Correct Answer: A) Elastic. 26. A good is considered relatively elastic when the elasticity of demand is A) Greater than 1. B) Greater than-1 but less than 0. C) Equal to 0. D) Equal to-1. Show Answer Correct Answer: A) Greater than 1. 27. A product is likely to have a price elasticity of demand that exceeds 1 when: A) Its price falls. B) It is a necessity. C) It has close substitutes. D) Consumers are not very responsive to changes in price. Show Answer Correct Answer: C) It has close substitutes. 28. Alyssa's Floral Shoppe dropped its prices for a dozen roses from $ 45 to $ 35 this year. Because of this decrease in price, the quantity sold increased from 1000 to 1500. The price elasticity of demand for Alyssa's roses is: A) 1.6. B) 2.25. C) 0.625. D) 1.00. Show Answer Correct Answer: A) 1.6. 29. You are on a committee that is considering ways to raise money for your House's fundraiser. You would recommend increasing the price of raffe tickets only if you thought the demand curve for these tickets was A) Inelastic. B) Elastic. C) Perfectly Elastic. D) Unit Elastic. Show Answer Correct Answer: A) Inelastic. 30. The quantity of peanuts supplied increased from 40 tons/week to 60 tons/week when the price of peanuts increased from $ 4/ton to $ 5/ton. The price elasticity of supply for peanuts over this price range is: A) Elastic. B) Unit Elastic. C) Inelastic. D) Perfectly Inelastic. Show Answer Correct Answer: A) Elastic. ← PreviousNext →Related QuizzesMicroeconomics QuizzesEconomics QuizzesElasticity Of Demand Quiz 1Elasticity Of Demand Quiz 3Elasticity Of Demand Quiz 4Elasticity Of Demand Quiz 5Elasticity Of Demand Quiz 6Elasticity Of Demand Quiz 7Elasticity Of Demand Quiz 8Elasticity Of Demand Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books