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3 Elasticity: Measurement and Determinants Online Quiz Questions

Use this free practice quiz with 20 questions to review 3 Elasticity: Measurement and Determinants, test your knowledge, and prepare for your next test or exam.

20 questions
01
True or false
1 point

True or false: A change in a good’s own price shifts its demand curve.

  1. A

    True

  2. B

    False

02
True or false
1 point

True or false: Elasticity can vary along a straight-line demand curve even when its slope is constant.

  1. A

    True

  2. B

    False

03
Choose one
1 point

Why is demand for one brand generally more elastic than demand for the broader product category?

  1. A

    Demand for the broader product category is generally more elastic because it includes more products.

  2. B

    Demand for an individual brand is generally more elastic because buyers can switch to other brands.

  3. C

    Demand for the brand and the broader category must have identical elasticity.

  4. D

    Demand for an individual brand is generally perfectly inelastic.

04
Choose all
1 point

Which factors tend to increase the absolute value of price elasticity of demand? Select all that apply.

  1. A

    Having more and closer substitutes available.

  2. B

    The purchase taking up a large share of the household budget.

  3. C

    The product being a minor expense with few alternatives.

  4. D

    Having more time to find alternatives or change habits.

05
Choose all
1 point

Which conditions tend to make price elasticity of supply higher? Select all that apply.

  1. A

    Producers have more time to adjust output.

  2. B

    Firms have unused capacity and readily available inputs.

  3. C

    Firms can readily alter production or new firms can enter.

  4. D

    Production requires specialized facilities that cannot be expanded quickly.

06
Fill in the blank
1 point

In the midpoint method, the of the starting and ending values is used as the base for each percentage change.

07
Fill in the blank
1 point

If demand is elastic, a price increase causes total revenue to .

08
Choose one
1 point

Price rises from $10\$10 to $12\$12, while quantity demanded falls from 100100 to 8080 units. Using the midpoint method, what is the approximate absolute value of demand elasticity over this interval?

  1. A

    0.820.82

  2. B

    1.001.00

  3. C

    1.221.22

  4. D

    2.002.00

09
Written response
1 point

A supply function is Qs=20+3PQ_s=20+3P. At P=10P=10, calculate the point elasticity of supply using Es=dQsdP×PQsE_s=\frac{dQ_s}{dP}\times\frac{P}{Q_s}.

10
Written response
1 point

Demand is described by Qd=200−5PQ_d=200-5P. At P=20P=20, calculate the signed point elasticity of demand using Ed=dQddP×PQdE_d=\frac{dQ_d}{dP}\times\frac{P}{Q_d}.

11
Choose one
1 point

Demand increases in a market. Compared with a market that has more elastic supply, what is likely when the supply curve is relatively inelastic?

  1. A

    Equilibrium price tends to rise less because quantity cannot expand much.

  2. B

    Equilibrium quantity must fall.

  3. C

    Equilibrium price tends to rise more because quantity cannot expand much.

  4. D

    The demand increase causes movement along the supply curve without changing equilibrium.

12
Choose one
1 point

A producer is already using all its capacity, and important inputs are difficult to obtain. What does this imply about its short-run supply response to a higher price?

  1. A

    It has little effect because the price increase itself creates new capacity.

  2. B

    Supply is likely to be less elastic because output is constrained.

  3. C

    Supply is perfectly elastic because the firm is already producing at capacity.

  4. D

    Supply is likely to become more elastic because inputs are difficult to obtain.

13
Choose one
1 point

Which statement correctly describes the units of price elasticity?

  1. A

    It is a ratio of percentage changes, so it has no units.

  2. B

    It is measured in units of quantity per unit of price.

  3. C

    Its units depend on whether the good is demanded or supplied.

  4. D

    It always has the same units as price.

14
Open ended
1 point

Explain what an elasticity with magnitude 0.50.5 means for the quantity response to a 1%1\% price change. Distinguish between demand and supply, and classify the response.

15
Choose one
1 point

Why is demand for one brand of a product generally more price elastic than demand for the broader product category?

  1. A

    Demand for the entire product category is generally more elastic because it includes more brands.

  2. B

    Demand for one brand is generally more elastic because buyers have closer alternatives.

  3. C

    Demand for one brand is generally less elastic because its products are more alike.

  4. D

    The two demand curves must have the same elasticity because they concern the same product.

16
True or false
1 point

Supply is generally more elastic when producers have a longer time to adjust.

  1. A

    True

  2. B

    False

17
Choose one
1 point

Demand for a good increases. Compared with a market where supply is elastic, what is more likely when supply is relatively inelastic?

  1. A

    Equilibrium quantity rises substantially while price changes very little.

  2. B

    Both equilibrium price and quantity must remain unchanged.

  3. C

    Equilibrium price tends to rise more because quantity supplied cannot expand much.

  4. D

    Equilibrium price tends to fall because inelastic supply prevents buyers from switching.

18
Choose one
1 point

A seller raises price while demand is elastic. What happens to total revenue, and why?

  1. A

    Total revenue falls because the percentage decline in quantity sold is larger than the percentage increase in price.

  2. B

    Total revenue rises because any price increase raises revenue.

  3. C

    Total revenue is unchanged because elastic demand means quantity and price change by equal percentages.

  4. D

    Total revenue rises because quantity demanded falls by a smaller percentage than price rises.

19
Written response
1 point

Demand has an absolute price elasticity of 0.50.5. If price rises by 4%4\%, approximately what percentage does quantity demanded decline? Enter the decline's magnitude as a percentage.

20
Written response
1 point

Using the midpoint method, price rises from $10\$10 to $12\$12, while quantity demanded falls from 100100 to 8080 units. What is the absolute value of demand elasticity, rounded to two decimal places?