Supply and Demand and Price Elasticity

Topics: Supply and demand, Price elasticity of demand, Consumer theory Pages: 4 (328 words) Published: February 8, 2014
Richards

Econ112
Exam I Sample Questions

1.
The price elasticity of demand for a good is the response of A)
demand to a one percent change in price of that good
B)
demand to a one percent change in price of the related good C)
quantity demanded to a one percent change in price of that good D)
quantity demanded to a one percent change in price of that related good E)
demand to a one percent change in income

2.
If the price of cheese falls by one percent and the quantity demanded rises by 3 percent, then the price elasticity of demand for cheese has a value of A)
0.03
B)
0.30
C)
0.333
D)
3
E)
30

3.
If the price elasticity of demand for football game ticket is 2, that means if the price increases by 1% quantity demanded decreases by A)
½%
B)
1%
C)
2%
D)
3%
E)
4%

4.
If the price elasticity of demand for a good is greater than one, then the demand for that good, with respect to price, is A)
elastic
B)
inelastic
C)
unitary elastic
D)
perfectly elastic
E)
perfectly inelastic

5.
Suppose a 10% increase in the price of pain relievers leads to a 5% decrease in quantity demanded of pain relievers. The elasticity for pain relievers, with respect to price, is A)
elastic
B)
inelastic
C)
unitary elastic
D)
perfectly elastic
E)
perfectly inelastic

6.
The correct relationship between the price elasticity of demand and total revenues is if demand is ___________, a price increase will ______________ total revenues. A)
elastic; increase
B)
inelastic; increase
C)
unit elastic; decrease
D)
unit elastic; decrease
E)
inelastic; decrease

7.
A cross price elasticity of 0.83 indicates the two goods are A)
substitutes.
B)
inelastic.
C)
complements.
D)
normal.
E)
elastic.

8.
The income elasticity of demand for chicken noodle soup is found to be -0.7. This means chicken noodle soup A)
is a normal good.
B)
has inelastic demand.
C)
is a...
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