AP Economics Terms Quiz 51-60 51-60

What does it mean if the price elasticity of demand (Ed) is less than 1?

• A) Demand is elastic

• B) Demand is perfectly elastic

• C) Demand is inelastic

• D) Demand is unit elastic

When demand is unit elastic, what is true about the percentage change in quantity demanded and price?

• Quantity changes more than price

• Price changes more than quantity

• They change by the same percentage

• There is no change in either

Which of the following describes perfectly elastic demand (Ed = ∞)?

• Demand curve is vertical

• Demand does not respond to price changes

• Demand curve is horizontal

• Price never changes

What characterizes perfectly inelastic demand (Ed = 0)?

• Consumers stop buying when price rises

• Quantity demanded changes with price

• Demand curve is vertical

• Demand curve is downward sloping

Which of the following is TRUE about the slope and elasticity of demand?

• A) A steeper slope always means higher elasticity

• B) Elasticity and slope are the same

• C) More vertical demand means more elastic

• D) More horizontal demand means more elastic

Demand for a good is more elastic when:

• It has no substitutes

• It is a necessity

• It has more available substitutes

• It represents a small portion of income

Total Revenue is calculated by:

• Price + Quantity

• Quantity – Cost

• Price × Quantity

• Cost × Quantity

According to the Total Revenue Test, if demand is price elastic and price increases, what happens to total revenue?

• It increases

• It stays the same

• It decreases

• It doubles

At the midpoint of a linear demand curve, the elasticity of demand is:

• Elastic

• Inelastic

• Perfectly elastic

• Unit elastic

If income elasticity (Ei) is negative, the good is:

• A luxury

• A normal good

• An inferior good

• A substitute good