Mock Quiz

Multiple-choice Questions: Chapter 5

1. The price elasticity of demand of a good is 1.25. Pick the correct answer from the

following:

a. the demand for the good is elastic.

b. the demand for the good is inelastic.

c. the good is a necessity

d. the good is a luxury

2. The demand for a good is highly inelastic if

a. the price elasticity of the good is close to zero.

b. the income elasticity of the good is close to one

c. if it is a necessity

d. both a and c.

3. The demand for a particular brand of tooth paste

a. can be more elastic than the demand for tooth paste, because tooth paste is a necessity.

b. can be less elastic than the demand for tooth paste, because tooth paste is a necessity.

c. more elstic than the demand for tooth paste, because a particular brand always have

close substitutes

d. none of the above.

4. A perfectly inelastic demand curve

a. is a vertical line parallel to Y-axis.

b. is a vertical line parallel to X-axis.

c. indicates a good with no close substitutes.

d. a and c.

e. b and c.

5. Pick the correct answer from the following:

a. the price elasticity of supply is larger in the short-run than in the long-run.

b. the price elasticity of demand is larger in the short-run than in the long-run.

c. the price elasticity of supply is smaller in the short-run, larger in the long-run. C

d. the price elasticity of demand is smaller in the short-run, but the price elasticity of

supply is larger in the the short-run than in the long-run.

6. Choose the statement which you find wrong in the following;

a. a mystery novel has more elastic demand than a required text book.

b. Beethoven’s recording has less elastic demand than classical music recording in

general.

c. heating oil during the next six months has more elastic demand than heating oil during

the next six years.

d. root beer has more elastic demand than water.

7. Suppose the demand schedule for compact discs is as follows:

Quantity Demanded Quantity Demanded

Price...