# The Economic Quiz

6 Questions | Total Attempts: 30  Settings  .

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• 1.
If the absolute price elasticity of demand for good Y is 0.75, when there is a 30 percent increase in price, we can conclude that quantity demanded
• A.

Has fallen by 40.0 percent

• B.

Has fallen by 10.4 percent

• C.

Has fallen by 35.0 percent

• D.

Has fallen by 22.5 percet

• 2.
An absolute price elasticity of demand equal to 0.4 indicates that a
• A.

10 percent decrease in price leads to a 4 percent increase in quantity demanded

• B.

4 percent increase in price leads to a 10 percent decrease in quantity demanded

• C.

1 percent increase in price leads to a 4 percent decrease in quantity demanded

• D.

0.4 percent decrease in price leads to a 1 percent increase in quantity demanded

• 3.
Suppose the demand for frozen  yogurt cones increases from 400 to 425 cones a day when the price is reduced from \$1.50 to \$1.25. In this situation, the elasticity of demand, calculated using the average method is
• A.

1.33

• B.

3

• C.

1

• D.

0.33

• 4.
If the price elasticity of demand for apples is greater than 1, an increase in apple prices will
• A.

Not affect total revenue

• B.

Raise total revenue

• C.

Either raise or lower total revenue but it is impossible to determine which

• D.

Lower total revenue

• 5.
If total revenues decline when the market clearing price increases, then we know that
• A.

Demand is elastic

• B.

Demand has zero elasticity

• C.

Demand is unit-elastic

• D.

Demand is inelastic

• 6.
Total revenues reach a maximum when
• A.

Demand is elastic

• B.

Demand is inelastic

• C.

Price elasticity is at minimum

• D.

Demand is unit-elastic