Day 3 MCQ Quiz

Which of the following is likely to have the highest price elasticity of demand?

• Eggs

• Beef

• Foreign travel

• Water

• None of the Above

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?

• .2

• 2

• .02

• 5

• None of the Above

A perfectly inelastic demand curve is

• Upward sloping and mostly vertical

• Vertical

• Not a straight line

• Horizontal

• None of the Above

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

• Demand: Inelastic

  Total Revenue: Increase

• Demand: Elastic

  Total Revenue: Increase

• Demand: Unit Elastic

  Total Revenue: Increase

• Demand: Unit Elastic

  Total Revenue: Decrease

• None of the Above

Total revenue is maximized when demand is

• Elastic

• Inelastic

• Unit-elastic

• Infinite

• None of the Above

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

• Substitutes

• Compliments

• Necessities

• Luxuries

• None of the Above

The income elasticity of demand for a normal good is

• One

• Zero

• Positive

• Between 0 and -1

• None of the Above

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

1. I. The use of inputs that are easily obtained

2. II. A high degree of substitutability between inputs

3. III. A shorter time period in which to supply the good

• I only

• II only

• I and II only

• I, II, III only

• None of the Above

There is a 10% increase in the price of mangoes. This creates a 40% change in the quantity demanded. The demand for mangoes is considered to be

• Perfectly inelastic

• Elastic

• Inelastic

• Perfectly elastic

• None of the above

Suppose the manager of a store wants to know whether the product of the store across the street is a substitute for her product. In other words, she would need to know if the cross-price elasticity of demand for the products _____.

• is positive
• is negative
• is zero
• is greater than 1
• None of the Above