Question 1

For a Giffen good:

Accepted Answer

A)  The price elasticity of demand is negative; the income elasticity of demand is negative. 
B)  The price elasticity of demand is positive; the income elasticity of demand is negative. 
C)  The price elasticity of demand is negative; the income elasticity of demand is positive. 
D)  The price elasticity of demand is positive; the income elasticity of demand is positive. 
A)  The price elasticity of demand is negative; the income elasticity of demand is negative. 
B)  The price elasticity of demand is positive; the income elasticity of demand is negative. 
C)  The price elasticity of demand is negative; the income elasticity of demand is positive. 
D)  The price elasticity of demand is positive; the income elasticity of demand is positive. B

Question 2

If the price elasticity of demand is - 0.2 this means demand is price _________.

Accepted Answer

Inelastic

Question 3

If the price elasticity of demand is - 2:

Accepted Answer

A)  Demand is price inelastic. 
B)  A fall in price will decrease revenue. 
C)  Demand is price elastic. 
D)  A fall in price decreases sales. 
A)  Demand is price inelastic. 
B)  A fall in price will decrease revenue. 
C)  Demand is price elastic. 
D)  A fall in price decreases sales. C

Question 4

If the price of a good rises by 5 percent and the quantity demanded falls by 20 percent, then price elasticity of demand is equal to:

Accepted Answer

A)  97 
B)  4 
C)  5 
D)  20 
A)  97 
B)  4 
C)  5 
D)  20

Question 5

If the price elasticity of demand is positive this means the demand curve slopes downwards.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is the most price inelastic demand?

Accepted Answer

A)  -0.01 
B)  -1 
C)  -5 
D)  -0.4 
A)  -0.01 
B)  -1 
C)  -5 
D)  -0.4

Question 7

The relationship between the price of one product and the quantity demanded of another is measured by:

Accepted Answer

A)  The income elasticity of demand 
B)  The substitute elasticity of demand 
C)  The complement price elasticity of demand 
D)  The cross price elasticity of demand 
A)  The income elasticity of demand 
B)  The substitute elasticity of demand 
C)  The complement price elasticity of demand 
D)  The cross price elasticity of demand

Question 8

The income elasticity of demand measures:

Accepted Answer

A)  How the quantity demanded changes in relation to price changes. 
B)  How the quantity demanded changes in relation to income changes. 
C)  A movement along the demand curve. 
D)  The sensitivity of supply to changes in income. 
A)  How the quantity demanded changes in relation to price changes. 
B)  How the quantity demanded changes in relation to income changes. 
C)  A movement along the demand curve. 
D)  The sensitivity of supply to changes in income.

Question 9

If the value of the price elasticity of demand is less than one then:

Accepted Answer

A)  Demand is very sensitive to price. 
B)  Demand is not very sensitive to price. 
C)  Supply is very sensitive to price. 
D)  Supply is not very sensitive to price. 
A)  Demand is very sensitive to price. 
B)  Demand is not very sensitive to price. 
C)  Supply is very sensitive to price. 
D)  Supply is not very sensitive to price.

Question 10

Demand is most likely to be price inelastic:

Accepted Answer

A)  When there are many substitutes. 
B)  Over time as individuals find alternatives. 
C)  When the product is heavily branded. 
D)  When the consumer can switch easily to other products. 
A)  When there are many substitutes. 
B)  Over time as individuals find alternatives. 
C)  When the product is heavily branded. 
D)  When the consumer can switch easily to other products.

Question 11

If demand is relatively price inelastic:

Accepted Answer

A)  The quantity demanded never changes. 
B)  The price never changes. 
C)  The percentage change in quantity demanded is less than the percentage change in price. 
D)  The percentage change in price is less than the percentage change in quantity demanded. 
A)  The quantity demanded never changes. 
B)  The price never changes. 
C)  The percentage change in quantity demanded is less than the percentage change in price. 
D)  The percentage change in price is less than the percentage change in quantity demanded.

Question 12

If an increase in the price of a product increases revenue:

Accepted Answer

A)  Demand must be totally price inelastic. 
B)  Demand must be totally price elastic. 
C)  Demand is price inelastic. 
D)  The income elasticity of demand is greater than 1. 
A)  Demand must be totally price inelastic. 
B)  Demand must be totally price elastic. 
C)  Demand is price inelastic. 
D)  The income elasticity of demand is greater than 1.

Exam 5: The Elasticity of Demand

For a Giffen good:

If the price elasticity of demand is - 0.2 this means demand is price _________.

If the price elasticity of demand is - 2:

If the price of a good rises by 5 percent and the quantity demanded falls by 20 percent, then price elasticity of demand is equal to:

If the price elasticity of demand is positive this means the demand curve slopes downwards.

Which of the following is the most price inelastic demand?

The relationship between the price of one product and the quantity demanded of another is measured by:

The income elasticity of demand measures:

If the value of the price elasticity of demand is less than one then:

Demand is most likely to be price inelastic:

If demand is relatively price inelastic:

If an increase in the price of a product increases revenue:

What Is Economics

The Production Possibility Frontier PPF

Demand

Behavioural Economics

Supply

Market Equilibrium

The Free Market System

Intervening in the Market System

Costs: Short Run and Long Run

Revenues, Costs, and Profits

Perfect Competition

Monopoly

Oligopoly

Monopolistic Competition and Non-Price Competition

The Labour Market

Introduction to Macroeconomics

Equilibrium in the Economy

National Income and the Standard of Living

Demand Side and Supply Side Policies

Influences on Aggregate Demand: Consumption

Influences on Aggregate Demand: Investment

Influences on Aggregate Demand: Government Revenues and Taxation

Influences on Aggregate Demand: International Trade, Globalization, and Exchange Rates

Government Objectives: Economic Growth and the Economic Cycle

Unemployment

Money

Government Objectives: Managing Inflation

Government Objectives: Achieving a Favourable Trade Position

Filters