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.
demand for the Disney Channel is inelastic in this price range.
C.
supply curve of the Disney Channel shifted to the left.
D.
demand curve for the Disney Channel shifted to the right.
Question #2
The price elasticity of a vertical demand curve is always
A.
one.
B.
zero.
C.
increasing as price increases.
D.
infinitely large.
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.
0.33.
B.
1
C.
2
D.
4
Question #4
A price cut will decrease the revenue a firm receives if the demand for its product is
A.
straight elastic.
B.
elastic.
C.
inelastic.
D.
of unit elasticity.
Question #5
A good will tend to be more price elastic if it
A.
is a necessity.
B.
is a small part of the household budget.
C.
is a luxury good.
D.
has no close substitutes.
Question #6
The demand for a new effective drug for the cure of AIDS would most likely be
A.
elastic.
B.
highly inelastic.
C.
perfectly elastic.
D.
unit elastic.
Question #7
Price elasticity of demand is defined as
A.
slope divided by price.
B.
percentage change in price divided by percentage change in quantity demanded.
C.
percentage change in quantity demanded divided by percentage change in price.
D.
the inverse of the price elasticity of supply.
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.
zero.
B.
positive.
C.
Any of the above is possible.
D.
negative.
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