Quiz on Demand and Elasticity

Which of the following is NOT a determinant of demand?

• Price of the product

• Consumer income

• Cost of production

• Tastes and preferences

The Law of Demand states that, other things being equal:

• Demand increases as supply decreases.

• Price and quantity demanded are directly related.

• Price and quantity demanded are inversely related.

• Demand is constant regardless of price.

What happens to the demand for a product when its price decreases, according to the Law of Demand?

• Demand decreases

• Demand increases

• Demand remains the same

• Demand fluctuates randomly

Which of the following is a measure of elasticity of demand?

• Total revenue

• Cross-price elasticity

• Price elasticity of demand

• Income elasticity of supply

If the price elasticity of demand for a product is greater than 1, the demand is considered:

• Elastic

• Inelastic

• Unitary elastic

• Perfectly inelastic

What does a perfectly inelastic demand curve look like?

• Horizontal line

• Vertical line

• Downward-sloping curve

• Upward-sloping curve

If the price of coffee increases and the demand for tea increases, coffee and tea are:

• Substitutes

• Complements

• Unrelated goods

• Luxury goods

Which of these factors can shift the demand curve to the right?

• Decrease in consumer income

• Increase in the price of a substitute good

• Decrease in the price of a complementary good

• Reduction in advertising

When the income elasticity of demand is negative, the good is considered:

• A normal good

• An inferior good

• A luxury good

• A necessity

If the price elasticity of demand is 1, the demand is said to be:

• Elastic

• Inelastic

• Perfectly elastic

• Unit elastic