Principles of Microeconomics (1)

Please choose from the answers option.

1. If quantity demanded rises to 120 units from the initial 100 units, as price falls by 9 percent, the price elasticity of demand equals

0.45 0.19 0.9 0.09

2. Goods with fewer substitutes have

lower price elasticity of demand. higher income elasticity of demand. higher price elasticity of demand. lower income elasticity of demand.

3. If the price of good X falls and the demand for good X is elastic, then the percentage __________ in quantity demanded is __________ the percentage rise in price, and total revenue __________.

fall; greater than; rises fall; equal to; remains constant rise; greater than; rise fall; greater than; falls

4. If the price of good X rises and the demand for good X is inelastic, then the percentage fall in quantity demanded is __________ the percentage rise in price, and total revenue __________.

greater than; rises greater than; falls none of the options provided equal to; remains constant

5. The shorter the period of time consumers have to adjust to price changes, the __________ the __________ elasticity of demand.

lower; income higher; income higher; price lower; price

6. If the percentage change in quantity demanded is less than the percentage change in price, demand is

elastic fairly elastic perfectly inelastic inelastic

7. The current price level is $3 and the quantity demanded rises from 360 to 400 after the current price level has increased. The price elasticity of demand between these two prices is 0.8. Calculate the new price level.

3.53 2.58 2.63 2.04

8. Price elasticity of demand indicates how sensitive quantity demanded is to changes in

demand price interest rates supply

9. Price rises from $10 to $15, and the quantity demanded falls from 100 units to 80 units. Calculate the arch price elasticity of demand between these two price points based on mid-point method?

3.67 0.40 0.56 1.86

10. If goods A and B have a cross elasticity of demand that is positive, this is evidence that goods A and B are __________ goods.

complement substitute inferior normal