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WorksheetsAS Economics MCQs: Elasticities
Total questions: 20
Worksheet time: 34mins
A good has a unitary price elasticity of demand and at a price of $20 a firm sells 40 000 units. How many will the firm sell if it charges a price of $5?
A 10 000
B 100 000
C 160 000
D 200 000
A
B
C
D
The cross elasticity of demand between two products, X and Y, is negative. What would be the immediate effect of a rise in the price of product Y?
A Quantity demanded of product X will fall.
B Supply of product X will rise.
C The cross elasticity of demand will rise.
D The price of product X would rise.
A
B
C
D
The demand for a good falls at the same time as its costs of production decrease. What will be the combined effect of these changes on the price and on the quantity supplied of the good?
A
B
C
D
What is a market demand curve?
A the demand for all of a country’s products
B the total sum of individual demand curves for a product
C the output of all the firms in an industry
D the stocks of a particular good available for sale
A
B
C
D
The price elasticity of demand for good X is 1. At a price of $12, quantity demanded is 4000 units. What will be the price when the quantity demanded is 20 000 units?
A $2.00
B $2.40
C $12.00
D $20.00
A
B
C
D
Consumer spending decreased in the recession of 2009-10. A firm tried to keep revenue high by giving discounts to encourage demand. It measured the price elasticity of demand (PED) for its own product and the cross elasticity of demand (XED) with its competitors’ products. When might such promotions achieve the result the company hoped?
A when PED is greater than one and XED is positive
B when PED is less than one and XED is negative
C when PED is less than one and XED is positive
D when PED is unity and XED is negative
A
B
C
D
What will happen to an industry’s supply curve if new firms enter the industry?
A It will shift to the left at any given price.
B It will shift to the right at any given price.
C There will be a downward movement along the supply curve.
D There will be an upward movement along the supply curve.
A
B
C
D
The diagrams show possible relationships between income and the quantity of a good purchased. Which diagram shows an inferior good?
A
B
C
D
The price elasticity of demand for a product is unitary for all price ranges. What will be the effect of an increase in its price?
A an equal proportionate decrease in the amount demanded
B an equal proportionate decrease in expenditure on the product
C an increase in the product’s percentage of total consumer expenditure
D no change in the amount of the product demanded
A
B
C
D
A fall in the price of cars causes the demand for petrol to rise by 20%. The cross-elasticity of demand between cars and petrol is –2. Which change in car prices has brought this about?
A
B
C
D
n 2008, Ansell, makers of surgical products and rubber gloves, increased profits by 2.6%, partly because of increased safety and health concerns in Brazil, Mexico, China and Russia. What would happen to the demand and supply curves on a diagram for Ansell’s products?
A
B
C
D
The cross elasticity of demand between bus travel and rail travel is +2. A rise in the price of bus fares caused the demand for rail travel to rise by 10%. Which change in bus fares has brought this about?
A
B
C
D
The supply function for a good can be written as Q = 2P + 10, where Q is the quantity supplied in kilos and P is the price per kilo in dollars. The price rises from $10 to $15 per kilo. The value of price elasticity of supply for this price increase lies in a range from
A 6 1 to 4 1 .
B 8 3 to 2 1 .
C 3 2 to 4 3 .
D 1 4 1 to 1 2 1 .
A
B
C
D
In the diagram, the supply curve shows the number of spaces in a car park and the demand curves show the demand for spaces on four different days (D1, D2, D3 and D4). The owner wishes to charge a parking fee on each of these days to allocate the spaces according to the market mechanism. Which pricing policy should the owner use?
A set a fixed price at P1
B set a fixed price at P4
C vary prices between P2 and P3
D vary prices between P1 and P4
A
B
C
D
The table shows the price elasticity of demand for four goods and services.
If the price of each item increased by 1%, for which items would the total expenditure increase?
A football tickets and light bulbs
B football tickets only
C motorcycles and telephone calls
D motorcycles only
A
B
C
D
In a market there is a surplus of a good. Which change would cause the market to come to an equilibrium?
A a decrease in demand
B a fall in price
C a government minimum price
D an increase in supply
A
B
C
D
The price of a good doubles but firms are able to increase production by only 10%. This is an example of
A excess supply.
B inelastic supply.
C market disequilibrium.
D market failure.
A
B
C
D
In the diagram, area OP1M1Q1 is equal to area OP2M2Q2. What is the value of the price elasticity of demand if the price is halved from P1 to P2?
A zero
B –0.5
C –1
D infinity
A
B
C
D
Good X and good Y are in joint supply. When would an increase in the supply of good X not lead to a change in the price of good X?
A Good X has a perfect price elasticity of demand.
B Good X has a perfect price inelasticity of demand.
C Good Y has a perfect price elasticity of demand.
D Good Y has a perfect price inelasticity of demand.
A
B
C
D
A businessman had intended to borrow $5000 at an interest rate of 8% per year. When the interest rate rose to 10% he decided to borrow only $4000. Within what range is his interest elasticity of demand for loans?
A 0.0 to –0.3
B –0.4 to –0.7
C –0.8 to –1.2
D –1.3 to –1.7
A
B
C
D
