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Week 3 Quiz Review
Test Description: This review game site will help you prepare for the Week 3 Quiz over Elasticity.
Instructions: Answer all questions to get your test result.
1) Price elasticity of demand measures:
A
how responsive quantity demanded is to changes in the price of the product.
B
the total change in quantity demanded and price.
C
the steepness of the slope of the demand curve.
D
how sensitive the demand for one good is to changes in price of the other good.
2) If the price elasticity of demand for a good is .25, the demand for the good can be described as:
A
inelastic
B
elastic
C
inferior
D
normal
3) Angie of Angie's Cupcake Emporium sells custom cupcake packages for 18.00. She sells 100 packages a week at that price. She ran a sale this week and charged $15.00. She sold 200. What is her elasticity of demand?
A
0.272727
B
3.666667
C
-3.666667
D
-0.272727
4) If price falls by 10 percent and the quantity demanded increases by 15 percent, the demand for the product is
A
Perfectly Elastic
B
Inelastic
C
Unitary Elastic
D
Elastic
5) Let's assume that the supply of paper increases resulting in a decrease in the price of paper, but the quantity sold doesn't change. This tells us that
A
the price elasticity of supply is infinite
B
the price elasticity of demand is zero
C
the price elasticity of supply is zero
D
the price elasticity of demand is unitary
6) As we move down a downward sloping demand curve, the price elasticity of demand
A
is different across each price range
B
is less than one across each price range
C
is equal to one across each price range
D
is greater than one across each price range
7) If the price falls and total revenue goes up, we can assume that the price elasticity of demand is
A
Inelastic
B
Unitary Elastic
C
Elastic
D
Perfectly Elastic
8) If the demand for a good is price inelastic at a given output level
A
Total revenue will decrease if its price increases.
B
Total revenue will increase if its price increases.
C
A relatively small change in price will lead to a large change in quantity demanded.
D
Total revenue will be negative.
9) Demand is elastic when
A
A reduction in price results in a decrease in total revenue.
B
An increase in price results in an increase in total revenue.
C
The elasticity coefficient is less than one.
D
An increase in price results in a decrease in total revenue.
10) Total revenue will fall if
A
elasticity of demand is 0.78 and price decreases.
B
elasticity of demand is 4.71 and price decreases.
C
Price increases and demand is unitary elastic.
D
Price increases and demand is inelastic.
11) A product has a price of $6.00 and sales of 650 units. Price increases to $8.00 and the quantity of sales falls to 550. The price elasticity of demand is
A
Unitary Elastic
B
Zero
C
Inelastic
D
Elastic
12) If a business raised its price from $8 to $9 when the demand was price elastic, total revenue would
A
Increase
B
Decease
C
Be Perfectly Inelastic
D
Remain Unchanged
13) You are the manager and have been informed that the elasticity for your product is 2.3. To increase total revenue you should
A
Increase the price.
B
Increase the supply.
C
Keep the price exactly where it is.
D
Decrease the price.
14) Which of the following would represent a market where the demand for a particular brand would be very inelastic?
A
There are many different brands to choose from and I always buy the cheapest.
B
There are no other real choices. I have to buy a particular brand.
C
There are a few different choices and I always choose the same brand.
D
There are many different brands to choose from and all of them are almost identical.
15) Which of the following would not be a characteristic of a product with a relatively elastic demand?
A
Buyers spend a relatively large portion of their income on the good.
B
Buyers spend a relatively small portion of their income on the good.
C
The substitutes for the product are nearly identical.
D
There are many different substitutes.
16) Which of the following will cause the demand curve to be relatively inelastic.
A
The price of the good makes up a relatively large portion of an individual's income.
B
There are many substitutes.
C
There are few substitutes.
D
The good is considered to be a luxury.
17) Let's assume that the demand for a particular product is inelastic in the short run, but elastic in the long run. A price increase will.
A
Cause total revenue to decrease in the short run, but stay the same in the long run.
B
Cause total revenue to stay the same in the short run, but decrease in the long run.
C
Cause total revenue to increase in the short run and decrease in the long run.
D
Cause total revenue to decrease in the short run and increase in the long run.
18) Which of the following products are most likely to be price elastic in the long run?
A
Gasoline and Engine Oil
B
Cereal and Bread
C
Computers and TV's
D
Milk and Eggs
19) Which of the following would be most likely to have a price inelastic demand?
A
Electricity
B
Steak
C
Car
D
Name Brand Shampoo
20) At a price of $100, 900 units are demanded and 1000 are supplied. At a price of $150, 500 units are demanded and 1500 are supplied. The elasticity of supply is:
A
1
B
-1
C
1.42857
D
-1.42857
*select an answer for all questions
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