1. The price of French fries falls by 10 per cent and quantity of French fries demanded increases by 12 per cent. We conclude that the demand for French fries is
a. inelastic.
b. elastic.
c. perfectly elastic.
d. unit elastic.
2.Suppose a rise in the price of a good from $7.50 to $8.50 leads to a decrease in the quantity demanded from 5000 to 3500 units. In this range of demand, the price elasticity of demand is
a. 2.82
b. 1500
c. 3.79
d. 0.354
3.If a 15 per cent increase in price results in a 10 per cent decrease in quantity demanded, the price elasticity of demand equals
a. 0.8
b. 3
c. 0.67
d. 1.5
4.Factors that influence the elasticity of demand include
a. the price of substitutes.
b. taste and preferences.
c. availability of close substitutes.
d. income.
5.If a good is a necessity, demand for the good tends to be
a. elastic.
b. inelastic.
c. unit elastic.
d. perfectly elastic.
6.Which of the following is not a determinant of the price elasticity of demand for a good?
a. substitutes
b. proportion of income spent on the good
c. price
d. time elapsed since a price change
7.If the quantity demanded for apples increases by 1.25 per cent when the price of grapes increases by 2.5 per cent, the cross elasticity of demand between apple and grapes is
a. -0.5
b. 0.5
c. 3.125
d. -3.125
8.If macaroni and cheese is a normal good, then
a. a decrease in price increases the quantity demanded.
b. a decrease in income decreases the quantity demanded at the current price.
c. a small decrease in income decreases the quantity of macaroni and cheese demanded at the current price by a large amount.
d. a large increase in income decreases the quantity of macaroni and cheese demanded at the current price by a small amount.
9.If Mr. Jones' income increases by 12 per cent and, as a result, his quantity demanded for classical CDs increases by 4 per cent, Mr. Jones' income elasticity of demand for classical music is
a. 48.0
b. -0.33
c. 0.33
d. 3.0
10.Supply is inelastic if
a. a large percentage change in price results in a small percentage change in quantity supplied.
b. a small percentage change in price results in a large percentage change in quantity supplied.
c. the good is an inferior good.
d. the good is a normal good.