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Unit 2.5-2.6: Multiple choice quiz

 

1. Price elasticity of demand can be described as _________

 

2. Price elasticity of supply can be described as _______

 

 

3. In a market the quantity supplied of a good or service is unaffected by changes in the price of the product.  It follows that the PES of the good or service is _________

 

 

4. Goods and services which are perfectly elastic have a PES of ___________

 

5. The following demand and supply curve represents the market for 

 

 

 

 

 

6. Income elasticity of demand (YED) is ______________

 

7. When an individuals monthly income rises from $500 to $1,000 their demand for a product falls from 100 units sold to 90.  Calculate the YED elasticity of this good?

 

8. When an individuals monthly income rises from $500 to $1,000 their demand for a product rises from 50 units sold to 90.  Calculate the elasticity of this good?

 

9. Complete the following sentence: Goods and services with a YED value > 1 are ______  as the % change in demand is _____________ than the % change in income.

 

10. Complete the following sentence: Goods and services with a YED value < 1 are ______  as the % change in demand is _____________ than the % change in income.

 

11. Which combination of YED elasticities matches the following products: Rice, bus travel, taxi fares, second hand cars.

 

12. Which of the following has the greatest impact on PES

 

13. A good has a PES = 1.  This means that the good is:

 

14. Golf clubs and golf membership have an PED and PES of:

 

15. The following diagram shows a product which is:             

 

 

 

 

16. The following diagram shows a product which is:         

 

 

 

 

17. Which of the following statements are true:

 

18. Which of the following statements are true:

 

19. A firm finds that when it reduces the price of product A, demand for B rises.  Which of the following course of action would you recommend?

 

20. Burger World finds that when incomes in the local area rise, demand for its burgers rises more than proportionately.  They also find that sales of their soft drinks fall.  Which of the following elasticities is the most plausible?

 

Total Score:

Available as a PDF file at: Elasticity