O Levels 2281 Elasticity Quiz: 2015 - 2018

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?

A 0.33

B 0.66

C 1.50

D 2.0

• A

• B

• C

• D

What aspect of demerit goods means they are overproduced?

A clear product information

B high external costs

C high product taxes

D low customer demand

• A

• B

• C

• D

The diagram shows market demand and supply curves. To what extent is the market in disequilibrium at price P3?

A OQ1 – OQ2

B OQ1 – OQ3

C OQ2 – OQ4

D OQ3 – OQ5

• A

• B

• C

• D

The price of bread rose by 5% and the quantity demanded fell by 4%. What was the price elasticity of demand for bread?

A –0.4

B –0.8

C –1.25

D –2.0

• A

• B

• C

• D

The diagram shows the supply curve for a good. What is the price elasticity of supply when the price rises from $10 to $12?

A 0.5

B 0.75

C 1.4

D 2.0

• A

• B

• C

• D

The diagram shows the demand curve for coffee in the US. Why did the quantity demanded move from Q1 to Q2?

A Coffee became cheaper.

B Incomes rose in the US.

C There was a successful advertising campaign by coffee retailers.

D The price of substitutes for coffee rose.

• A

• B

• C

• D

In an African country with large areas of tropical desert the price elasticity of demand for salt is highly inelastic. This will result in greater consumer expenditure on salt when price changes from P1 to P2. Which diagram illustrates this situation?

• A

• B

• C

• D

The table shows the demand schedule for a good at different prices. The current market price for the good is $10. Following a 20% increase in price, what will be the change in the quantity demanded?

A – 60

B – 40

C +120

D +200

• A

• B

• C

• D

A newspaper reported that ‘The world market for coffee has returned to equilibrium’. Which situation supports this statement?

A A sequence of poor harvests resulted in shortages.

B Decreased transport costs led to a surplus of supply.

C Farmers matched demand by planting more coffee bushes.

D The price of coffee was fixed between producers.

• A

• B

• C

• D

A railway company increases ticket prices by 10% for travel between 06:00 and 09:00, causing a reduction in demand by 2%. After 09:00 it reduces ticket prices by 5%, resulting in a 7% increase in demand. What is the price elasticity of demand in response to these price changes?

• A

• B

• C

• D