Free Practice Quiz Question List

3 Factors and Applications of Elasticity Online Quiz Questions

Use this free practice quiz with 20 questions to review 3 Factors and Applications of Elasticity, test your knowledge, and prepare for your next test or exam.

20 questions

True or false

1 point

True or false: Elasticity compares percentage changes in quantity with percentage changes in price, rather than comparing absolute changes in units.

A
True
B
False

True or false

1 point

True or false: Supply is often less elastic over a longer period than in the short run because sellers have more time to adjust production.

A
True
B
False

Choose one

1 point

Which comparison best explains why demand for one brand of bottled water is often more elastic than demand for drinking water as a broad category?

A
Demand for drinking water is more elastic because buyers can switch to another broad category.
B
Demand for one brand of bottled water is often more elastic because buyers can switch to similar brands.
C
Demand for both is always equally elastic because both products are water.
D
Demand for one brand of bottled water is less elastic because it is more narrowly defined.

Fill in the blank

1 point

Complete the relationship: A seller's total revenue is multiplied by .

Fill in the blank

1 point

A new production method lowers the cost of making a product, shifting supply to the right. It tends to make the market price and the quantity sold .

Choose all

1 point

Select all conditions that generally make sellers more able to respond to a price change by adjusting output.

A
Sellers have spare capacity.
B
Production depends on a growing season that sellers cannot speed up.
C
Sellers have inventories available.
D
Inputs are readily obtainable and production methods are easy to adjust.
E
Capacity is already fully used and inputs are difficult to obtain.

Written response

1 point

Price rises by 10%, and quantity supplied rises by 15%. Calculate the price elasticity of supply.

Choose one

1 point

A law requires sellers to send a per-unit tax payment to the government. What can be concluded about who bears the tax's economic burden?

A
The party legally responsible for sending the tax payment always bears the entire economic burden.
B
The government determines the economic burden solely by choosing which side submits the payment.
C
The legal payer alone does not determine who bears the tax's economic burden.
D
The side with more alternatives always bears more of the tax burden.

Written response

1 point

A seller charges $12 per item and sells 50 items. What is the seller's total revenue, in dollars?

Choose one

1 point

Select the statement that correctly identifies a price change that tends to raise a seller's total revenue.

A
When demand is elastic, lowering price tends to raise total revenue; when demand is inelastic, raising price tends to raise total revenue.
B
Raising price tends to raise total revenue whether demand is elastic or inelastic.
C
Lowering price tends to raise total revenue whether demand is elastic or inelastic.
D
A price change tends to raise total revenue only when demand is unit elastic.

Choose all

1 point

Select all price changes that tend to raise total revenue, based on demand elasticity.

A
With elastic demand, lowering price tends to raise total revenue.
B
With elastic demand, raising price tends to raise total revenue.
C
With inelastic demand, raising price tends to raise total revenue.
D
With inelastic demand, lowering price tends to raise total revenue.

Choose one

1 point

A drought reduces the amount of a crop farmers can bring to market. In the short run, supply is inelastic, and demand for the crop is also relatively inelastic. Which outcome is possible?

A
The price must fall because the harvest is smaller, and farmers' revenue must fall.
B
The price can rise while quantity falls; farmers' revenue may rise if the price increase outweighs the reduction in sales.
C
Quantity must rise because demand is inelastic, so farmers' revenue must rise.
D
The price and quantity must both rise because demand is relatively inelastic.

True or false

1 point

True or false: Supply elasticity, rather than demand elasticity, determines whether a price increase raises a seller's total revenue.

A
True
B
False

Open ended

1 point

In a market, supply is less elastic than demand. Who tends to bear more of a per-unit tax's economic burden, and why? Explain whether the party legally required to send the payment determines the answer.

Written response

1 point

What availability of alternatives tends to make demand for a product more elastic?

Choose one

1 point

All else equal, which comparison is most likely to hold for buyers choosing between a luxury and a necessity?

A
Demand for a necessity tends to be more elastic than demand for a luxury.
B
Demand for a luxury tends to be more elastic than demand for a necessity.
C
Demand for necessities and luxuries is always equally elastic.
D
Whether a good is a luxury or necessity affects supply elasticity, not demand elasticity.

Choose one

1 point

Two goods have the same percentage price increase. For which good is demand more likely to be elastic because of the budget-share factor?

A
The inexpensive item, because buyers respond more to price changes on all low-cost goods.
B
Neither item, because the percentage price change is identical.
C
The item that takes the larger share of a buyer's budget.
D
The item purchased more frequently, regardless of its cost or budget share.

Choose one

1 point

Two firms face the same price increase. Which is more likely to have the more elastic supply response?

A
The firm with spare capacity and available inputs.
B
The firm operating at full capacity with inputs that are difficult to obtain.
C
The firm whose production depends on a growing season.
D
The firm that cannot change its production methods or output in response to price.

Written response

1 point

Price rises by $10\%$ , and quantity demanded falls by $4\%$ . Calculate the absolute price elasticity of demand using $|E_d|=\frac{|\%\text{ change in quantity demanded}|}{|\%\text{ change in price}|}$ . Enter a decimal.

Choose one

1 point

Why is a farm often unable to increase the quantity of mature crops it supplies quickly after prices rise?

A
Farm supply is more elastic in the short run because farmers can immediately grow mature crops.
B
Farm supply is often less elastic in the short run because crops cannot be produced immediately.
C
Farm supply is equally elastic in every time period.
D
Farm supply is less elastic in the long run because farmers have more time to adjust.

3 Factors and Applications of Elasticity Online Quiz Questions

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