This quiz works best with JavaScript enabled. Home > Economics > Microeconomics > Elasticity > Elasticity Of Demand – Quiz 3 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Elasticity Of Demand Quiz 3 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Oil has seen a decrease in demand of 9%, while the price has increased 13% A) .69 elastic. B) 1.44 inelastic. C) .69 inelastic. D) 1.44 elastic. Show Answer Correct Answer: C) .69 inelastic. 2. A 5% fall in price of a good results in 10% rise in its demand .Calculate Ed A) -1. B) -2. C) -5. D) -3. Show Answer Correct Answer: B) -2. 3. A normal good is defined as a good for which demand increases as: A) Its price decreases. B) The number of consumers of the good increases. C) The income of consumers increases. D) The price of substitutes increase. Show Answer Correct Answer: C) The income of consumers increases. 4. Demand for agricultural products is ..... A) Perfectly elastic. B) Unitary elastic. C) Inelastic. D) Elastic. Show Answer Correct Answer: C) Inelastic. 5. The price decreases from RM2, 000 to RM1, 800. Quantity demanded per year increases from 5000 to 6000 units. Which of the following is correct? A) The price elasticity of demand is-2. B) The good is inferior. C) Income elasticity is + 0.5. D) Income elasticity is + 2. Show Answer Correct Answer: A) The price elasticity of demand is-2. 6. When the price of a product rises from $ 10 to $ 15, the demand falls from 5000 to 4000 units. What is the value of the price elasticity of demand for the product? A) 0.4. B) 1.5. C) 2.5. D) 0.2. Show Answer Correct Answer: A) 0.4. 7. If the cross elasticity of demand is-2: A) The products are unitary elastic. B) The products are complements. C) The products are substitutes. D) The products are unrelated. Show Answer Correct Answer: B) The products are complements. 8. Quantity demanded increase 30% while price decreases 30%; this means that the price elasticity of demand is A) Relatively elastic. B) Unit elastic. C) Relatively inelastic. D) Perfectly inelastic. Show Answer Correct Answer: B) Unit elastic. 9. PED is inelastic and a firm raises its price. What happens to total revenue? A) Total revenue increases. B) Total revenue stays the same. C) Total revenue decreases. D) Marginal revenue decreases. Show Answer Correct Answer: A) Total revenue increases. 10. If storage of a good is cheap and readily available, supply is likely to be A) Perfectly elastic. B) Perfectly inelastic. C) Relatively inelastic. D) Relatively elastic. Show Answer Correct Answer: D) Relatively elastic. 11. Which of the following is not a determinant of PES? A) Factor Mobility. B) Type of Industry. C) Adjustment Time Period. D) Technology. Show Answer Correct Answer: D) Technology. 12. Which of the following does not determine demand elasticity? A) Availability of substitutes. B) Consumer's budget to spend on goods and services. C) Duration of adjustment period. D) Government spending. Show Answer Correct Answer: D) Government spending. 13. Do higher prices lead to increased revenues for a company? A) Always. B) Sometimes. C) Never. D) Only when demand is elastic. Show Answer Correct Answer: B) Sometimes. 14. If the elasticity of demand for a commodity is unity, an increase in its price will A) Have no effect on consumer surplus. B) Leave the quantity purchased unchanged. C) Decrease the quantity purchased. D) Increase total expenditure on the commodity. Show Answer Correct Answer: C) Decrease the quantity purchased. 15. Price elasticities of demand tend to A) Fall as higher prices are charged. B) Rise as higher prices are charged. C) Almost always be constant. D) Not be related to the length of time. Show Answer Correct Answer: B) Rise as higher prices are charged. 16. The graph of a demand curve that is perfectly elastic is: A) Positively sloped. B) Horizontal. C) Negatively sloped. D) Vertical. Show Answer Correct Answer: B) Horizontal. 17. A given percentage change in price leads to a small percentage change in quantity demanded. (Less than 1) A) Elastic Demand. B) Unitary Elastic Demand. C) Inelastic Demand. D) None of above. Show Answer Correct Answer: C) Inelastic Demand. 18. The PED of Good A is the degree of responsiveness of quantity demanded of Good A to a change in the ....., ceteris paribus. A) Price of Good B. B) Supply of good A. C) Income of consumers of Good A. D) Price of Good A. Show Answer Correct Answer: D) Price of Good A. 19. If income elasticity is .4 what can we assume about this good? A) It is a complement. B) It is a normal good. C) It is an inferior good. D) It is a substitute. Show Answer Correct Answer: B) It is a normal good. 20. What is a reason a product would be elastic? A) The product is a necessity. B) The quantity demanded is ten. C) The price is relatively small. D) The product can be easily substituted. Show Answer Correct Answer: D) The product can be easily substituted. 21. The PED for a product is-0.5. Following a sales promotion demand has risen by 24%. How big was the discount offered to customers? A) 3%. B) 24%. C) £12. D) 12%. Show Answer Correct Answer: D) 12%. 22. For which type of good would you expect the price elasticity of demand to be highest? A) Normal goods. B) Inferior goods. C) Luxury goods. D) Giffen goods. Show Answer Correct Answer: C) Luxury goods. 23. Elasticity measures ..... A) The extent of a change in demand. B) The extent of a change in price. C) The quantity demanded. D) The % of income a good consumes. Show Answer Correct Answer: A) The extent of a change in demand. 24. If average income rises from $ 18, 000 per year to $ 22, 000 per year and annual gasoline consumption per household rises from 1000 to 1500 gallons, the income elasticity of demand for gas is: A) 1. B) 2. C) In the inferior range. D) 0.5. Show Answer Correct Answer: B) 2. 25. If the YED of a good is assessed to be 1.7, the good can be classified as a A) Inferior Good. B) Normal Good. C) Necessity. D) None of the above. Show Answer Correct Answer: B) Normal Good. 26. Red Wing Shoes has seen a decrease in demand of 40%, while the price has increased 20% A) 2 inelastic. B) 2 elastic. C) .5 elastic. D) .5 inelastic. Show Answer Correct Answer: B) 2 elastic. 27. The elasticity of supply measures the responsiveness of A) Quantity supplied to changes in price. B) Quantity demanded to changes in supply. C) Quantity supplied to changes in income. D) Quantity supplied to changes in demand. Show Answer Correct Answer: A) Quantity supplied to changes in price. 28. A per unit tax on a good or service like a tax on gasoline. A) Excise tax. B) Revenue tax. C) Income tax. D) Progressive tax. Show Answer Correct Answer: A) Excise tax. 29. A cut in price from $ 75 to $ 60 sees demand for a product rise by from 1, 200 units to 1, 500 units. What would the price elasticity of demand be for this product? A) -0.8. B) -1.25. C) -2. D) -1. Show Answer Correct Answer: B) -1.25. 30. In the long run price elasticity of demand generally does what for normal goods A) Increases. B) Becomes perfectly inelastic. C) Remains constant. D) Decreases. Show Answer Correct Answer: A) Increases. ← PreviousNext →Related QuizzesMicroeconomics QuizzesEconomics QuizzesElasticity Of Demand Quiz 1Elasticity Of Demand Quiz 2Elasticity 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