Microeconomics Quiz: Elasticity & Its Application
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Microeconomics Quiz: Elasticity & Its Application. Demand and supply are what holds a market, and elasticity is the measure through which variable changes as a result of another variable. Demand can either be elastic or inelastic. Below is a microeconomics quiz on flexibility & its application in the economy. Give it a try and get to prepare for the microeconomics exam that is coming up.
- 1.If the quantity demanded of a good is sensitive to a change in the price of that good, demand is said to be price inelastic.
- A.
True
- B.
False
- 2.Using the mipoint method to calculate elasticity, if an increase in the price of pencils from 10 cents to 20 cents reduces the quantity demanded from 1,000 pencils to 500 pencils, then the demand for pencils is unit price elastic.
- A.
True
- B.
False
- 3.The demand for tires should be more inelastic than the demand for Goodyear brand tires.
- A.
True
- B.
False
- 4.The demand for aspirin this month should be more elastic than the demand for aspirin this year.
- A.
True
- B.
False
- 5.The price elasticity of demand is defined as the percentage change in the price of that good divided by the percentage change in quantity demanded for that good.
- A.
True
- B.
False
- 6.
- A.
True
- B.
False
- 7.If the demands for goods is price elastic, an increase in its price will increase total revenue in that market.
- A.
True
- B.
False
- 8.The demand for a necessity such as insulin tends to be elastic.
- A.
True
- B.
False
- 9.If a demand curve is linear, the price elasticity of demand is constant along it.
- A.
True
- B.
False
- 10.If the income elasticity of demand for a bus ride is negative, then a bus ride is an inferior good.
- A.
True
- B.
False
- 11.If the price elasticity of supply for blue jeans is 1.3, an increase of 10 percent in the price of blue jeans would increase the quantity supplied of blue jeans by 13 percent.
- A.
True
- B.
False
- 12.An advance in technology that shifts the market supply curve to the right always increases total revenue received by producers.
- A.
True
- B.
False
- 13.If a small percentage increase in the price of a good greatly reduces the quantity demanded for that good, the demand for the good is
- A.
Price inelastic
- B.
Price elastic
- C.
Unit price elastic
- D.
Income inelastic
- E.
Income elastic
- 14.The price elasticity of demand is defined as
- A.
The percentage change in price of a good divided by the percentage change in the quantity demanded of that good.
- B.
The percentage change in income divided by the percentage change in the quantity demanded
- C.
The percentage change in the quantity demanded of a good divided by the percentage change in the price of that good
- D.
The percentage change in the quantity demanded divided by the percentage change in income
- E.
None of the above
- 15.In general, a flatter demand curve is more likely to be
- A.
Price elastic
- B.
Price inelastic
- C.
Unit price elastic
- D.
None of the above
- 16.In genearl, a steeper supply curve is more likely to be
- A.
Price elastic
- B.
Price inelastic
- C.
Unit price elastic
- D.
None of the above
- 17.Which of the following would cause a demand curve for a good to be price inelastic?
- A.
There are a great number of substitutes for the good
- B.
The good is inferior
- C.
The good is a luxury
- D.
The good is necessity
- 18.The demand for which of the following is likely to be the most price inelastic?
- A.
Airline tickets
- B.
Bus tickets
- C.
Taxi rides
- D.
Transportation
- 19.If the cross-price elasticity between two goods is negative, the two goods are likely to be
- A.
Luxuries
- B.
Necessities
- C.
Complements
- D.
Substitutes
- 20.If a supply curve for a good is price elastic, then
- A.
The quantity supplied is sensitive to changes in the price of that good
- B.
The quantity supplied is insensitive to changes in the price of that good
- C.
The quantity demanded is sensitive to changes in the price of that good
- D.
The quantity demanded is insensitive to changes in the price of that good
- E.
None of the above
- 21.A decrease in supply (shift to the left) will increase total revenue in the market if
- A.
Supply is price elastic.
- B.
Supply is price inelastic
- C.
Demand is price elastic
- D.
Demand is price inelastic
- 22.If an increase in the price of a good has no impact on the total revenue in that market, demand must be
- A.
Price inelastic
- B.
Price elastic
- C.
Unit price elastic
- D.
All of the above
- 23.Technological improvements in agriculture that shift the supply of agricultural commodities to the right tend to
- A.
Reduce total revenue to farmers as a whole because the demand for food is inelastic
- B.
Reduce total revenue to farmers as a whole because the demand for food is elastic
- C.
Increase total revenue to farmers as a whole because the demand for food is inelastic
- D.
Increase total revenue to farmers as a whole because the demand for food is elastic
- 24.If demand is linear (a straight line), then price elasticity of demand is
- A.
Constant along the demand curve.
- B.
Inelastic in the upper portion and elastic in the lower portion
- C.
Elastic in the upper portion and inelastic in the lower portion
- D.
Elastic throughout
- E.
Inelastic throughout
- 25.If the income elasticity of demand for a good is negative, it must be
- A.
A luxury good
- B.
A normal good
- C.
An inferior good
- D.
An elastic good
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