AP Micro Elasticity Quiz

If a 2% change in the price of a good leads to a 10% change in the quantity demanded of a good, what is the value of price elasticity of demand?

• .02

• .2

• 5

• 10

• 20

A perfectly elastic demand curve is

• upward sloping

• vertical

• not a straight line

• horizontal

• downward sloping

Which of the following would cause demand for a good to be relatively inelastic?

• It has a large number of close substitutes.

• Expenditures on it represent a large share of consumer income.

• There is ample time to adjust to price changes.

• It is a necessity.

• Its price is in the upper left section of the demand curve.

Which of the following is correct for a price increase? When demand is _____, the total revenue will _____.

• inelastic; decrease

• elastic; decrease

• unit-elastic; increase

• unit-elastic; decrease

• elastic; increase

If the cross-price elasticity between two goods is negative, it means that the two goods are

• substitutes

• complements

• normal

• inferior

• luxuries

The income elasticity of demand for a normal good is

• zero

• 1

• infinite

• positive

• negative

A perfectly elastic supply curve is

• positively sloped

• negatively sloped

• vertical

• horizontal

• u-shaped

Which of the following leads to a more inelastic price elasticity of supply?

I. the use of inputs that are easily obtained

II. a high degree of substitutability between inputs

III. a shorter time period in which to supply the good

• I only

• II only

• III only

• I and II only

• I, II, and III

The price of a smartphone was $800 and the quantity demanded was 400. The price then fell to $600 and the quantity demand rose to 600. The price elasticity of demand for the above example is.

• 25

• 50

• 2

• .2

• .5

A cut in price from $1.50 to $1.20 sees demand for a product rise by 10%. What would the price elasticity of demand be for this product?

• .5

• 1

• 2

• 3

• 5