1. What term is used to describe quantities demanded that do not change much in response to a change in price?

Multiple Choice

A) Inelastic demand.

B) Elastic demand.

C) Unitary elasticity.

D) Price elasticity of demand.

E)The elasticity coefficient.

2. What is unitary elasticity?

A) An elasticity coefficient which is negative.

B) An elasticity coefficient which is equal to zero.

C) An elasticity coefficient which is equal to one.

D) A percentage change in quantity which is exactly equal to the percentage change in demand.

E) Where elasticity and inelasticity are balanced.

3. Under which of the following situations will total revenue fall?

A) If elasticity is > 1 and price falls.

B) If elasticity is > 1 and price rises.

C) If elasticity is < 1 and price rises.

D) If elasticity is = 1 and price falls.

4. Suppose that the price of a product increased from $18 to $22, and the quantity demanded decreased from 63 to 57. What is the value of the price elasticity of demand?

A) 0.43.

B) 0.5.

C) 1.5.

D) 2.0.

5. What do products such as movies, tomatoes and restaurant meals have in common?

A) They are all inferior goods.

B) They all are likely to have incomes elasticities less than one.

C) The demand for all three goods is price elastic.

D)The demand for all three goods is price inelastic.

E) They all have a small number of substitute goods.

6. Which of the following statements is true about the price elasticity of demand?

It is higher in the short run than in the long run because people's habits change slowly.

It is higher in the long run than the short run because people have more time to find substitute products.

It is the same in the short run and the long run.

It is higher in the short run because markets adjust slowly to changes.

7. Which of the following products has the most inelastic demand?

A) Restaurant meals.

B) Tomatoes.

C) Movie theatre admissions.

D) Eggs.

E) Ocean cruises

8. On what type of products do governments impose "sin" taxes?

A) On products with elastic demand such as candy.

B) On products with inelastic demand such as alcohol.

C) On illegal products.

D) On consumer goods but not capital goods.

9. What is the effect of a rise in income on the quantity demanded of a product?

A) It will rise if it is an inferior good.

B) It will rise if it is a normal good.

C) It will fall if it has many substitute goods.

D) It will fall if price elasticity of demand is zero.

10. Suppose that the cross elasticity of demand for Product A and Product B is -1.6 and the price of Product A decreased by 20 per cent. What will happen to the quantity demanded of Product B?

A) It will increase by 3.2%.

B) It will increase by 32%.

C) It will decrease by 3.2%.

D) It will decrease by 32%.