Elasticity

Which topic is included in microeconomics?

• economic growth

• elasticity of demand

• inflation

• the balance of payments

Lithium is an essential metal for the production of electric cars. Following a 10% increase in the price of lithium, supplies increase by 15%. This led to a 5% increase in the price of electric cars.

What is the price elasticity of supply (PES) for lithium?

• 0.33

• 0.66

• 1.50

• 2.0

The price elasticity of supply of good X is 0.1. The good suddenly becomes very fashionable, leading to a large increase in demand. What would be the likely outcome of this change in the short term?

• a large increase in output

• a large increase in price

• a small increase in price

• a small increase in revenue

A mobile (cell) phone operator increases the price of making calls on its network. After the price increase, the revenue of the mobile phone operator falls by 10%. What is the price elasticity of demand (PED) for the mobile operator’s service?

• elastic

• inelastic

• perfectly elastic

• unit elastic

A product has a price elasticity of demand of – 0.5. What happens to the demand for a product if its price falls from $1 to $0.80?

• It decreases by 10%

• It decreases by 20%.

• It increases by 10%

• It increases by 20%.

The demand for gas in a country becomes price-inelastic. What will happen as a result?

• Gas workers will be less likely to be successful in obtaining wage increases.

• Gas workers will be more likely to be successful in obtaining wage increases.

• Total expenditure on gas by consumers will fall when its price rises

• Total expenditure on gas by consumers will rise when its price falls.