Question 1

Suppose the price of a pizza falls from $$20.50 to 19.50 $$and the quantity demanded increases from 9 to 11 pizzas per hour. What is the price elasticity of demand using the midpoint formula?

Accepted Answer

$$\frac{20\%}{5\%} = 4$$

Question 2

Which of the following best describes a perfectly inelastic demand curve?

Accepted Answer

A vertical line with elasticity equal to $$0$$

Question 3

If the percentage change in quantity demanded is less than the percentage change in price, the demand for the good is:

Accepted Answer

Inelastic

Question 4

Which factor does NOT increase the price elasticity of demand for a good?

Accepted Answer

The good is a necessity with few substitutes

Question 5

If the price elasticity of demand for a product is $$0.5$$, what will happen to total revenue if the price increases?

Accepted Answer

Total revenue will increase

Question 6

A 1 percent decrease in price leads to a 2 percent increase in quantity demanded. What is the price elasticity of demand and how is demand classified?

Accepted Answer

Elasticity is $$2$$; demand is elastic

Question 7

Which of the following goods is most likely to have an income elasticity of demand less than zero?

Accepted Answer

Instant noodles (inferior good)

Question 8

If the cross elasticity of demand between two goods is positive, the goods are:

Accepted Answer

Substitutes

Question 9

Which of the following scenarios would result in a perfectly elastic supply curve?

Accepted Answer

A horizontal supply curve with elasticity equal to $$\infty$$

Question 10

Which of the following will make the supply of a good more elastic?

Accepted Answer

Producers can easily substitute resources in production

Question 11

If the price of burgers (a substitute for pizza) increases, what happens to the quantity demanded of pizza, and what is the sign of the cross elasticity?

Accepted Answer

Quantity demanded of pizza increases; cross elasticity is positive

Question 12

A good has a price elasticity of demand equal to $$1 at a $$certain price and quantity. If the price decreases by 10%, what happens to total revenue?

Accepted Answer

Total revenue remains unchanged

Question 13

Which of the following best describes the relationship between total revenue and elasticity when demand is inelastic?

Accepted Answer

A price increase raises total revenue

Question 14

If the income elasticity of demand for a good is $$1.5$$, how is the good classified?

Accepted Answer

Normal good, income elastic

Question 15

Which of the following is true about the elasticity of supply in the long run compared to the short run?

Accepted Answer

Elasticity of supply is greater in the long run

Question 16

A 10% increase in the price of a good leads to a 5% increase in quantity supplied. What is the elasticity of supply?

Accepted Answer

$$\frac{5\%}{10\%} = 0.5$$

Question 17

Which of the following statements about the midpoint formula for elasticity is correct?

Accepted Answer

It gives the same elasticity value regardless of whether price rises or falls

Question 18

If a price cut increases total revenue, what can you conclude about the price elasticity of demand?

Accepted Answer

Demand is elastic

Question 19

Which of the following is NOT a determinant of the price elasticity of demand?

Accepted Answer

The cost of production

Elasticity in Microeconomics: Price, Income, and Supply Elasticities

Guida di studio - Domande di pratica

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