What does the price elasticity of demand measure?
A) The change in quantity demanded due to a change in price
B) The total revenue from sales of a good
C) The total income earned by producers
D) The change in price due to changes in income
If the price elasticity of demand is greater than 1, demand is said to be:
A) Inelastic
B) Unit elastic
C) Elastic
D) Perfectly elastic
When the price elasticity of demand is less than 1, demand is said to be:
A) Elastic
B) Inelastic
C) Unitary elastic
D) Perfectly inelastic
If the price of a good increases and total revenue decreases, the demand for the good is:
A) Elastic
B) Inelastic
C) Unit elastic
D) Perfectly inelastic
Which of the following is an example of perfectly elastic demand?
A) A luxury car
B) A basic necessity like salt
C) A good with many substitutes
D) A good with no substitutes
Which of the following would likely have an elastic supply?
A) A product with a long production time
B) A product that can be easily produced in the short run
C) A product that requires specific resources
D) A product with no alternative production methods
If the demand for a product is perfectly inelastic, then:
A) The quantity demanded does not change as price changes
B) The price and quantity demanded are directly related
C) The quantity demanded increases as the price increases
D) The demand curve is upward sloping
When demand is unitary elastic, a change in price will result in:
A) No change in total revenue
B) An increase in total revenue
C) A decrease in total revenue
D) A perfect match between price and quantity demanded
If a good has a perfectly inelastic supply, the supply curve will be:
A) Horizontal
B) Vertical
C) Upward sloping
D) Downward sloping
Which of the following factors can affect the price elasticity of demand?
A) Availability of substitutes
B) Necessity or luxury nature of the good
C) Time period considered
D) All of the above
If the price of a good rises and the quantity supplied increases, the supply is:
A) Elastic
B) Inelastic
C) Perfectly inelastic
D) Unitary elastic
What does the cross-price elasticity of demand measure?
A) The responsiveness of the demand for one good to changes in the price of another good
B) The change in quantity demanded due to changes in the price of the good itself
C) The change in supply due to changes in the price of the good
D) The responsiveness of supply to changes in the price of a good
If the cross-price elasticity of two goods is positive, the goods are:
A) Substitutes
B) Complements
C) Unrelated
D) Perfect substitutes
The income elasticity of demand measures:
A) The responsiveness of demand to changes in consumer income
B) The responsiveness of supply to changes in income
C) The change in price due to changes in income
D) The total revenue of producers
If the income elasticity of demand is greater than 1, the good is considered:
A) A necessity
B) A luxury good
C) A basic good
D) A Giffen good
Which of the following would make the demand for a good more elastic?
A) The good is a necessity
B) The good has fewer substitutes
C) The good represents a larger portion of the consumer’s income
D) The good is habit-forming
If a firm faces an inelastic demand curve, it can increase its total revenue by:
A) Raising prices
B) Lowering prices
C) Increasing output
D) Decreasing output
If the elasticity of supply is greater than 1, supply is:
A) Inelastic
B) Elastic
C) Unit elastic
D) Perfectly elastic
Which of the following goods is most likely to have an elastic supply?
A) A new movie release
B) A rare antique
C) A seasonal crop
D) A mass-produced consumer electronic device
What does the price elasticity of supply measure?
A) The change in quantity demanded due to a change in price
B) The responsiveness of quantity supplied to changes in price
C) The change in price due to changes in income
D) The responsiveness of demand to price changes
When supply is perfectly elastic, the supply curve is:
A) Horizontal
B) Vertical
C) Upward sloping
D) Downward sloping
If the price elasticity of demand is zero, the demand curve is:
A) Perfectly elastic
B) Perfectly inelastic
C) Downward sloping
D) Upward sloping
When the price of a good falls and total revenue increases, the demand for the good is:
A) Elastic
B) Inelastic
C) Unit elastic
D) Perfectly elastic
Which of the following describes a good with inelastic demand?
A) The quantity demanded is highly responsive to price changes
B) The quantity demanded does not change much when the price changes
C) The price and quantity demanded move in the same direction
D) There are many substitutes for the good
What is the elasticity of demand for a perfectly elastic good?
A) Zero
B) One
C) Infinity
D) Unspecified
Which of the following factors typically makes demand more elastic?
A) The good is a necessity
B) There are close substitutes available
C) The good represents a small portion of the consumer’s budget
D) The good is habit-forming
If the cross-price elasticity of two goods is negative, the goods are:
A) Substitutes
B) Complements
C) Perfect substitutes
D) Unrelated
Which of the following factors can make the price elasticity of demand for a good more elastic?
A) The good is a necessity
B) The good has many substitutes
C) The good represents a small portion of income
D) The good is habit-forming
The elasticity of demand can be classified as all of the following except:
A) Perfectly inelastic
B) Perfectly elastic
C) Unitary elastic
D) Economically inelastic
