Econ 101 - Microeconomics » Fall 2022 » Elasticity Quiz
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Question #1
Tele-Com, Inc., the nation's largest cable TV company, tested the effect of a price reduction for the Disney Channel. It lowered prices from $10.75 to $7.95 and found that the number of customers more than doubled. This means the
A.
demand for the Disney Channel is elastic in this price range.
B.
supply curve of the Disney Channel shifted to the left.
C.
demand for the Disney Channel is inelastic in this price range.
D.
demand curve for the Disney Channel shifted to the right.
Question #2
The price elasticity of a vertical demand curve is always
A.
infinitely large.
B.
increasing as price increases.
C.
one.
D.
zero.
Question #3
At $6 per steak, consumers are willing to buy two steaks. At a price of $2, consumers are willing to buy six steaks. The elasticity of the market demand curve between P = $6 and P = $2 (dropping all minus signs) is
A.
1
B.
4
C.
2
D.
0.33.
Question #4
A price cut will decrease the revenue a firm receives if the demand for its product is
A.
elastic.
B.
of unit elasticity.
C.
straight elastic.
D.
inelastic.
Question #5
A good will tend to be more price elastic if it
A.
has no close substitutes.
B.
is a necessity.
C.
is a small part of the household budget.
D.
is a luxury good.
Question #6
The demand for a new effective drug for the cure of AIDS would most likely be
A.
unit elastic.
B.
perfectly elastic.
C.
highly inelastic.
D.
elastic.
Question #7
Price elasticity of demand is defined as
A.
percentage change in price divided by percentage change in quantity demanded.
B.
slope divided by price.
C.
the inverse of the price elasticity of supply.
D.
percentage change in quantity demanded divided by percentage change in price.
Question #8
A demand curve is described as perfectly inelastic if
A.
the same quantity is purchased regardless of price.
B.
only quantity demanded can change.
C.
neither price nor quantity demanded ever change.
D.
the same price is charged regardless of quantity sold.
Question #9
Chicken and fish are substitutes. Therefore, the cross elasticity of demand between chicken and fish is
A.
negative.
B.
positive.
C.
zero.
D.
Any of the above is possible.
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