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Multiple Choice Questions

The document contains multiple choice questions related to price elasticity of demand, including definitions, calculations, and implications of changes in price and quantity demanded. Each question presents a scenario requiring the selection of the correct answer from four options. The topics covered include buyer responsiveness, elasticity types, and total revenue effects.

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Minh Nguyệt
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20 views2 pages

Multiple Choice Questions

The document contains multiple choice questions related to price elasticity of demand, including definitions, calculations, and implications of changes in price and quantity demanded. Each question presents a scenario requiring the selection of the correct answer from four options. The topics covered include buyer responsiveness, elasticity types, and total revenue effects.

Uploaded by

Minh Nguyệt
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Multiple choice questions

1) The price elasticity of demand indicates:

A buyer responsiveness to price changes.


B: the extent to which a demand curve shifts when incomes change.
C: the slope of the demand curve.
D: how far business executives can stretch their fixed costs.

2) The price of product X is reduced from $100 to $90 and, as a result, the quantity demanded
increases from 50 to 60 units. From this we can conclude that the demand for X in this price
range:

A: has declined.
B: is of unit elasticity.
C: is inelastic.
D: is elastic.

3) If the price elasticity of demand for a product is 2.5, then a price cut from $2.00 to $1.80 will:

A: increase the quantity demanded by 2.5%.


B: decrease the quantity demanded by 2.5%.
C: increase the quantity demanded by 25%.
D: do none of the above.

4) Suppose that, as the price of Y falls from $2.00 to $1.90, the demanded quantity of Y increases
from 110 to 118. It can be concluded that the price elasticity of demand is:

A: 4.00
B: 2.09
C: 1.44
D: 3.94

5) In which of the following instances will total revenue decline?

A: Price rises and supply is elastic.


B: Price falls and demand is elastic.
C: Price rises and supply is inelastic.
D: Price rises and demand is elastic.

6)Price elasticity of demand is generally:

A: greater in the long run than in the short run.


B: greater in the short run than in the long run.
C: the same in both the short run and the long run.
D: greater for ‘necessities’ than it is for ‘luxuries’.

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