Economics 1 - Principles of Economics » Summer 2021 » Elasticity Quiz

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Question #1
If the supply curve for a product is vertical, then the elasticity of supply is:
A.   equal to zero.
B.   greater than 1 but less than infinity.
C.   equal to infinity.
D.   equal to 1.
Question #2
If the supply curve for aspirin is perfectly elastic, then a reduction in demand will cause the equilibrium price to:
A.   stay the same and the equilibrium quantity to fall.
B.   fall and the equilibrium quantity to fall.
C.   rise and the equilibrium quantity to fall.
D.   rise and the equilibrium quantity to stay the same.
Question #3
When economists are sketching examples of demand and supply, it is common to sketch a demand or supply curve that is close to vertical, and then to refer to that curve as _______ .
A.   unitary elasticity
B.   elastic
C.   income elasticity
D.   inelastic
Question #4
The elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in _______ .
A.   price
B.   quantity supplied
C.   the slope in the supply curve
D.   the slope of the demand curve
Question #5
Price elasticity of demand is defined as:
A.   the slope of the demand curve.
B.   the percentage change in price divided by the percentage change in quantity demanded.
C.   the slope of the demand curve divided by the price.
D.   the percentage change in quantity demanded divided by the percentage change in price.
Question #6
If the supply curve for housing is perfectly inelastic, then a reduction in demand will cause the equilibrium price to:
A.   fall and the equilibrium quantity to fall.
B.   rise and the equilibrium quantity to fall.
C.   rise and the equilibrium quantity to stay the same.
D.   fall and the equilibrium quantity to stay the same.
Question #7
Demand is said to be _______ when the quantity demanded is not very responsive to changes in price.
A.   unit elastic
B.   elastic
C.   independent
D.   inelastic
Question #8
Demand is said to be _______ when the quantity demanded is very responsive to changes in price.
A.   unit elastic
B.   independent
C.   elastic
D.   inelastic
Question #9
A perfectly elastic supply curve is:
A.   downward sloping to the left.
B.   vertical.
C.   upward sloping to the right.
D.   horizontal.
Question #10
If cola and iced tea are good substitutes for consumers, then it is likely that:
A.   their price elasticities of supply are less than one.
B.   their income elasticities are less than zero.
C.   their cross price elasticities are greater than zero.
D.   their price elasticities of demand are less than one.
Question #11
A 10 percent increase in the price of soda leads to a 20 percent increase in the quantity of iced tea demanded. It appears that:
A.   cross-price elasticity of demand for iced tea is -0.5.
B.   elasticity of demand for iced tea is 2 and is elastic.
C.   cross-price elasticity of demand for iced tea is 2.
D.   elasticity of demand for soda 0.5 and is inelastic.
Question #12
Supply is said to be _______ when the quantity supplied is very responsive to changes in price.
A.   unit elastic
B.   inelastic
C.   elastic
D.   independent
Question #13
Demand is said to be _______ when the quantity demanded changes at the same proportion as the price.
A.   inelastic
B.   independent
C.   elastic
D.   unit elastic
Question #14
Suppose that Bobo purchases 1 pizza per month when the price is $19 and 3 pizzas per month when the price is $15. What is the price elasticity of Bobo's demand curve?
A.   0.235
B.   4.25
C.   2
D.   6.33
Question #15
The demand for a product is unit elastic. At a price of $20, 10 units of a product are sold. If the price is increased to $40, then one would expect sales to equal:
A.   5 units.
B.   0 units.
C.   10 units.
D.   20 units.
Question #16
Taxes on goods with _______ demand curves will tend to raise more tax revenue for the government than taxes on goods with _______ demand curves.
A.   elastic; inelastic
B.   unit elastic; inelastic
C.   inelastic; elastic
D.   elastic; unit elastic
Question #17
A 10 percent increase in income leads to a 15% decrease in the quantity of macaroni and cheese demanded but no change in the price of macaroni and cheese. From this information, we can assume:
A.   macaroni is an inferior good and price elasticity of demand is less than 1.
B.   macaroni is an inferior good and price elasticity of supply is infinite.
C.   macaroni is an inferior good and price elasticity of supply is equal to zero.
D.   macaroni is a normal good and price elasticity of demand is greater than 1.
Question #18
The longer the time period considered, the more the elasticity of supply tends to:
A.   converge to zero
B.   remain constant
C.   decrease
D.   increase
Question #19
If the demand curve for a life-saving medicine is perfectly inelastic, then a reduction in supply will cause the equilibrium price to:
A.   rise and the equilibrium quantity to stay the same.
B.   stay the same and the equilibrium quantity to fall.
C.   rise and the equilibrium quantity to fall.
D.   rise and the equilibrium quantity to rise.
Question #20
The elasticity of supply is defined as the _______ change in quantity supplied divided by the change in price.
A.   percentage; percentage
B.   total; percentage
C.   percentage; marginal
D.   marginal; percentage
Question #21
Billy Bob's Barber Shop knows that a 5 percent increase in the price of their haircuts results in a 15 percent decrease in the number of haircuts purchased. What is the elasticity of demand facing Billy Bob's Barber Shop?
A.   0.15
B.   3.0
C.   0.1
D.   0.05
Question #22
The price elasticity of demand for tickets to local baseball games is estimated to be equal to 0.89. In order to boost ticket revenues, an economist would advise:
A.   decreasing the price of game tickets because demand is elastic.
B.   not changing the price of game tickets because demand is unit elastic.
C.   increasing the price of game tickets because demand is elastic.
D.   increasing the price of game tickets because demand is inelastic.
Question #23
A 25 percent decrease in the price of breakfast cereal leads to a 20 percent increase in the quantity of cereal demanded. As a result:
A.   the elasticity of demand will increase.
B.   total revenue will increase.
C.   total revenue will decrease.
D.   total revenue will remain constant.
Question #24
A demand or supply curve with _______ would be horizontal in appearance.
A.   infinite cost elasticity
B.   unitary elasticity
C.   infinite elasticity
D.   zero elasticity
Question #25
A 10 percent decrease in the price of potato chips leads to a 30 percent increase in the quantity of soda demanded. It appears that:
A.   elasticity of demand for potato chips is 3.
B.   cross-price elasticity of demand for soda is -3.
C.   elasticity of demand for soda 3.
D.   elasticity of demand for potato chips is 3.
Question #26
_______ is the change in what is on the horizontal axis (quantity) divided by the change in what is on the vertical axis (price).
A.   Supply
B.   Demand
C.   Revenue
D.   Elasticity
Question #27
If the demand curve is perfectly elastic, then an increase in supply will:
A.   decrease the price but result in no change in the quantity exchanged.
B.   increase the quantity exchanged but result in no change in the price.
C.   increase both the price and the quantity exchanged.
D.   increase the price but result in no change in the quantity exchanged.
Question #28
A price cut will increase the total revenue a firm receives if the demand for its product is:
A.   unit inelastic.
B.   unit elastic.
C.   inelastic.
D.   elastic.
Question #29
Youth smoking seems to be morethan adult smoking-that is, the quantity of youth smoking will fall by a greater percentage than the quantity of adult smoking in response to a given percentage increase in price.
A.   cross-price elastic
B.   inelastic
C.   unitary elastic
D.   elastic
Question #30
The evidence on the supply curve of financial capital is controversial, but at least in the short run, the elasticity of savings with respect to the interest rate appears to be _______ .
A.   negative
B.   elastic
C.   perfectly elastic
D.   inelastic

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