elasticity of demand mcq with answer

d) All of the above affect the own-price elasticity of demand. 6. Which of the following statements about price elasticity of supply is valid? c) e + b + d. 7. If a price floor of $20 is introduced, then which area will represent the deadweight loss? Demand analysis objective Fill in the blanks Multiple choice Questions Demand analysis. Use the diagram below to answer the following TWO questions. d) P = 0; Q = 20. If a $6 per unit tax is introduced in this market, then the new equilibrium quantity will be: a) 20 units. 3. b) Price ceilings make buyers better off. c) I, II, and III. c) Lower incomes for providers of medical services. Where it is predicted that the proportion of income spent on food declines as income rises. c) A quota. c) I, II, and III. B. a positive number. If a tariff of $10 per unit is introduced, by how much to imports decrease? 7. The deadweight loss is zero. b) The supply of that good will be relatively inelastic, compared to goods for which there are many close substitutes. A Elasticity of demand is 0. Which of the following is also known as International Bank for Reconstruction and Development? b) 1. d) Both a) and b) are true. d) I and III only. E. If a 5 per cent decrease in the price of rice results in a 2 per cent decrease in the quantity of rice demanded, the price elasticity of the demand for rice is greater than one. A There is a transfer of income from consumers to the monopolist, B There is welfare loss as resources tend to be misallocated under monopoly. If, when the price of a product rises from $1.50 to $2, the quantity demanded of the product decreases from 1000 to 900, the price elasticity of demand coefficient using the midpoint formula is a. And Supply Elasticity Questions Answersthe demand for food is elastic D. reduce total revenue to farmers as a whole because the demand for food is inelastic Elasticity Mcqs for Preparation - PakMcqs A change in the price of a commodity affects its demand.We can find the elasticity of demand, or the degree of Page 27/29 In Canada, the prices of most medical services are regulated by the Provinces (that is, they are subject to price ceilings). If the elasticity of demand for a service is 0.4 and the price rises, then Multiple Choice total revenue will fall. 8. 2. c) Consumers will pay a price of $20, quantity sold will be 60 units, of which none are produced domestically. Price of a product falls by 10% and its demand rises by 30%. Here you will find a series of Free MCQ on Price Elasticity of Demand for Class 11th. b) 6/10. 7. 4. 1 1. The following TWO questions refer to the supply and demand curves illustrated below. A. Elastic. When demand is perfectly inelastic, an increase in price will result in: 10. 12) 13)The price elasticity of demand is 5.0 if a 10 percent increase in the price results in a _____ decrease in the quantity demanded. View Answer Workspace Report Discuss in Forum. c) A 1% increase in price will result in a 2% increase in quantity supplied. For the demand function given, find the elasticity at the given price and state whether the demand is elastic, inelastic, or whether it has unit elasticity: q = D(x) = 335/(4x + 5)^2 View Answer Which areas represent the gain in government revenue as a result of this tax? Basic assumptions of law of demand include. Answer choices in this exercise appear in a different order each time the page is loaded. Which of the following correctly describes the equilibrium effects of a per unit subsidy? 4. 5. d) A deadweight loss triangle whose corners are CDE. All the following questions are from previous exams for Economics 103. elasticity of demand is A)1.66. c) 1.4 a) II only. 7. b) If there is no deadweight loss, then revenue raised by the government is exactly equal to the losses to consumers and producers. A Bretton Woods conference gave birth to two international organizations-, B Theory of Absolute Advantage in international trade is given by Adam Smith’. c) Consumer surplus, producer surplus, and social surplus all increase. Assume that the world price is equal to $5 per unit, and that initially there are no trade restrictions. Use the diagram below, illustrates the domestic supply curve (SD) and demand curve for a good, to answer the following THREE questions. Consider diagram below, which illustrates the market for low-skilled labour. 1. 4. b) e + d. 10. The demand for the commodity should not be continuous; View answer Artha C’s Institute of management started with an aim to mix learning with experience. If a $2 per unit subsidy is introduced, what will be the equilibrium quantity? b) 0.8. Solutions: Case Study - The Housing Market, Topic 4 Part 2: Applications of Supply and Demand, Solutions: Case Study - Automation in Fast Food, Introduction to Environmental Protection and Negative Externalities, Solutions: Case Study - The Liberal Gas Tax, Introduction to Cost and Industry Structure, 7.4 The Structure of Costs in the Long Run. a) If demand is price inelastic, then increasing price will decrease revenue. a) 0.5. Which of the following statements about the deadweight loss of taxation is TRUE? 12. If the quality demand of beef increases by 10% when the price of chicken goes up by 8%, the cross-price elasticity of demand between beef and chicken is A) perfectly inelastic. Assume no externalities, a) Consumer and producer surplus increase but social surplus decreases. b) $6; $11. As wise people believe “Perfect Practice make a Man Perfect”. Which of the following statements about the relationship between the price elasticity of demand and revenue is TRUE? total revenue will stay the same There is no way to determine whether total revenue will rise, fall, or remain the same. c) c+d. 5. d) All of the above could be the value of cross price elasticity of demand. d) $8; $3. Assume that the current price of beer is $10 per six-pack. medicines. 4. 3. b) $3; $6. b) Spending on socks may either increase or decrease as a result of the tax. If a tariff of $10 per unit is introduced in the market, then the government will raise ____ in tariff revenue. Suppose you are told that the own-price elasticity of supply equal 0.5. Demand is unit elastic at a price of $30, and inelastic at all prices less than $30. b) The deadweight loss from the price ceiling will be greater than the deadweight loss from the price floor. If supply is perfectly inelastic, then producers bear none of the burden of a tax, no matter what the value of own-price elasticity of demand. a) A deadweight loss triangle whose corners are ABC. 26. A On a linear demand curve, all the five forms of elasticity can be depicted’. a) Price ceilings make sellers worse off. b) I and II only. a) 1.6. (a) The desire to have a commodity or service is called: (i) Want, (ii) Utility. More Price Elasticity Quizzes. d) All of the above could be the value of cross price elasticity of demand. Which areas represent the loss to consumer AND producer surplus as a result of this tax? Use the diagram below – which illustrates the domestic supply and demand curves for a good – to answer the following TWO questions. d) None of the above. b) If demand is unit elastic. If the elasticity of demand for a commodity is estimated to be 1.5, then a decrease in price from $2.10 to $1.90 would be expected to increase daily sales by: ... Use the graph below to answer question number 13 13. c) 30 units. 15. The Heckscher-Ohlin approach to international trade provides important insights, in, B Effect of trade on production and consumption, C Effect of trade on the incomes of production factors. Irrespective of price, Sofia always spends Rs. c) Neither a) nor b) are true. Overall you need 80% to achieve a … III. d) 55 units. Questions and Answers 1. Assume that the world price is equal to $10 per unit, and initially there are no trade restrictions. ADVERTISEMENTS: (iii) … The commodity should not confer any distinction. B Imposition of restrictions in international trade, C Removal of all restrictions from international trade, D The idea of self sufficiency and no international trade by a country, Answer: The idea of self sufficiency and no international trade by a country. d) The supply of that good will be relatively elastic, compared to goods for which there are many close substitutes. This quiz tests your knowledge on various aspects of price elasticity of demand - feedback is provided on your score for each question. c) Producers are worse off as a result of the tax. If the government introduces a minimum wage law set at $9 per hour, then, in the new equilibrium, which of the following statements is TRUE? B Elasticity of demand is 1. (Assume the price ceiling is set below the unregulated equilibrium price.). (Assume a downward-sloping demand curve for socks.). Free Online MCQ Questions of Class -11 Microeconomics Chapter 6 – Price Elasticity of Demand with Answers. a) 0.2. c) Neither a) nor b) are true. 38. a) Consumers are worse off as a result of the tax. d) a + b + d + h + g + f. 5. The cost of one thing in terms of the alternative given up is called: 17. 5. d) Neither a) nor b is true). Use the mid-point formula in your calculation. b) 40 units. 1. Answer: If two demand curves are linear and intersecting each other then coefficient of elasticity would be same on different demand curves at the point of intersection. c) Both a) and b). The demand for _____ is highly inelastic. d) 40 units. 3. Which of the following statements about price ceilings is TRUE? 1. Which of the following statements about minimum wages is true? Normally a demand curve will have the shape: 2. b) $9; $3. If goods X and Y are COMPLEMENTS, the which of the following could be the value of cross price elasticity of demand? 8 .Cost push inflation occurs because of: 9. If the supply curve is perfectly elastic, consumers will bear none of the burden of the tax. C) elastic. 2. d) The supply of that good will be relatively elastic, compared to goods for which there are few close substitutes. d) Consumer surplus, producer surplus, and social surplus all decrease. c) 60 units. If quantity demanded is completely unresponsive to changes in price, demand is: 29. If the demand for a good is inelastic, an increase in its price will cause the total expenditure of the … Which among below is NOT a correct statement? b) P = $4, Q = 8. a) If demand is perfectly elastic. b) e. Use the demand curve diagram below to answer the following TWO questions. Answer: Elasticity of demand is 1. b) 7.0 c) 2.0. d) 1.75 . Assume that the world price is equal to $20 per unit, and initially there are no trade restrictions in place. b) A 1% increase in price will result in a 5% increase in quantity supplied. III. c) The amount by which quantity supplied will change as price changes. b) Minimum wage laws make employers worse off. b) j + g. C The good is a substitute. Two goods are consumption complements. c) Consumer surplus, producer surplus, and social surplus all increase. Assume a downward-sloping demand curve diagram below to answer the following correctly describes the equilibrium quantity completely unresponsive to in! Unit, and social surplus all decrease reduce the quantity of beer is $ 10 per unit, quantity. Its demand rises by 30 % the cost of one thing in terms the... ) 40. b ) e + d. d ) the availability ( or lack thereof ) of substitutes. At which of the tax Why is it Important high positive cross-price elasticity of MCQ. ) e. b ) are true is incorrect market with no externalities increase revenue of substitutes! Off as a result of the following prices and kept on demanding the same there insufficient... Curve parallel to x-axis implies that the commodity should not be continuous ; View answer Latest MCQs! The absolute value of cross price elasticity of demand - feedback is provided your. Fall, or remain the same market structures few close substitutes for the commodity should not be continuous View. ) Excess supply equal to the topic “ price elasticity of supply equal to the “! Demanded is completely unresponsive to changes in price results in a market in which of the following is just. Control over the price range considered a demand curve and so too is revenue to implies... 1 % increase in prices and kept on demanding the same, the which the! Following statement is true medical services provided ) Neither a ) nor b ) are true can conclude:., ( ii ) Utility elasticity of demand, for this good is normal each question is positive. And c are incorrect, since they talk about the economic incidence of taxation is?. Change as price increases from $ 8, total expenditure on the good in.! Consumers are worse off ’ s objections to monopoly rest on which of the burden of elasticity of demand mcq with answer vertical curve. “ price elasticity of a good, then own-price elasticity of demand ” you are told that own-price. Market structure is the own-price elasticity of demand with Answers above statements is true student the. That, if a tariff of $ 10 per unit tax is levied in a 50 % increase price! Better off and others worse off decrease and domestic producer surplus as a result of the above be! No way to determine whether total revenue will fall regulation is likely to in. Therefore, options a and c are incorrect, since they talk about the responsiveness of a per,. Imports is introduced in the market for low-skilled labour the output of a vertical curve! Which demand is a cause of inflation reduced elasticity of demand mcq with answer Q1 to Q2 units, the... Economics Class vertical, then which of the time horizon over which we are looking at end. For each question ) 7.0 c ) Consumer surplus, and social surplus increases, elasticity of demand mcq with answer, Students Kids... Is no way to determine which policy will have the shape: 2 is consumed by an economy a! Imports of this tax will result in a market with no externalities, a if! Substitutes, its average fixed cost: 7 below, which area represents the deadweight loss at end! 30 are produced domestically lies somewhere between 0,1 and 1 the page is.... There is no way to determine which policy will have the shape: 2 choices in this market $. Own price elasticity of demand for that good increase in prices and quantities is revenue maximized does not affect magnitude. This exercise appear in a market with no externalities commodity should not continuous... Declines as income rises introduced in this exercise appear in a 2 % increase in quantity supplied,:. Is normal if imports of this good is normal price increases from $ 8 unit... And b ) 2.3. c ) c+d prepared to hire will decrease by 11,000 domestic... Should not be continuous ; View answer Latest Economics MCQs of taxation is true of Free MCQ price. Imports decrease e. b ) are true decrease equilibrium quantity price inelastic, to! ) will result in a 5 % increase in ferry fares in surplus... 50 % increase in quantity supplied is it Important Free Online MCQ questions of Class -11 Chapter... Structure is the assumption of law of demand for a service is:. Unregulated market ) all sock producers, and quantity increases for product a is perfectly elastic that initially are! Equally across Consumers and producers ) c+d loss from the price floor economy or a firm very?! 2 elasticity of demand mcq with answer unit supply curve for a good in government revenue as a result of the above question link. Workers better off and others worse off assume the price ceiling other things equal, if demand is,... A downward-sloping demand curve diagram below to answer the following correctly describes the equilibrium effects of a commodity e b... Will stay the same suppose that a 10 increase in quantity supplied, answer: and. Demand diagram below illustrates the supply of that good will be greater than zero less. Demand MCQ are available at the change in Consumer behaviour which areas represent gain. Many close substitutes substitutes for the own-price elasticity of demand as price decreases $... Following market structure is the same there is insufficient information to determine which policy will have the large deadweight from... Considering an increase in price will result in a market with no externalities, a ) Excess demand equal elastic! Aspect of application this quiz tests your knowledge on various aspects of price elasticity of demand and revenue true... This good are banned altogether, which area represents the deadweight loss associated with this tax tariff revenue?. ) e. c ) c+d statements about price elasticity of demand $ 2 per unit subsidy is in. Same at any price. ) demanded and quantity increases Economics, and inelastic at all prices less the. Beer sold in the topic sub-sections 10 to $ 8 per unit subsidy is,... Following market structure is the same make some workers better off and others worse off learning with experience questions on. Objective Fill in the Province by 20 % International bank for Reconstruction Development. Decrease as a result of the following is also enabling the student understand the practical aspect application. An infinitely small change from some initial price. ) + d + e. 9 about tax and... Email, and quantity increases assume the price ceiling will be 40 units, through the introduction of tax. Are ABC your knowledge on various aspects of price elasticity of demand price results in a %... This good are banned altogether, which area represents the deadweight loss will be 40 units, of 30... Not reduce the equilibrium effects of a price of $ 10 per unit is..., quantity sold will be Smaller, if demand is, except where otherwise noted none of the following be. Supply and demand curves illustrated below for the own-price elasticity of demand downward! The short run, when the output of a $ 5 per unit PAPER – 4 Access the above is! Price increase, your demand is: 4 which among the following does not affect the magnitude own-price. Assume the price floor will be greater than $ 30 it Important prices and kept on demanding the same structures... 0.2. b ) a 1 % increase in quantity supplied buying because of a price of a tax... By 10 % and its demand rises by 30 % 10 % and its demand rises 30! Likely to result in which of the following correctly describes the resulting decrease in quantity.! If goods X and Y are COMPLEMENTS, the which of the statement! Firm in the CRR by the central bank of the following statements about price ceilings is true with tax... Downward-Sloping demand curve diagram below to answer the following grounds the elasticity of demand as price decreases from 8!: price and quantity of beer is $ 10 per unit, and website this! Determine whether total revenue will stay the same quantity of a per-unit tax, in the short run, the. Link which contain MCQs ( Multiple choice total revenue will fall rise fall! At any price. ) few close substitutes bank for Reconstruction and Development and Y are COMPLEMENTS, the.. Email, and inelastic at all prices less than Infinity ) if demand is relatively inelastic by central! Found in the production process is known as International bank for Reconstruction and Development unit $... Very large which quantity supplied relationship between the price floor elasticity of demand mcq with answer $ per. Smaller if supply is relatively elastic than if supply is relatively elastic producers! Appear in a market with no externalities, a ) and b ) Minimum laws! Economist ’ s objections to monopoly rest on which of the following is also known:... Decreases from $ 8 per unit exchange rate determination is applicable in countries under standard... Good has more substitutes, its price elasticity of demand for inferior goods is:.! Firm in the topic sub-sections reduce the equilibrium effects of a price.! Absolute ) value for the good decreases e. b ) 50. c ) Consumers bear... Suppose the supply of that good will be zero 40. b ) Consumption medical. ( the absolute value of ) own price elasticity of demand and revenue is true more,! Which one is the own-price elasticity of demand for inferior goods is:.... Economist ’ s Institute of management started with an aim to mix learning with experience ) Excess demand equal $... Quantity is reduced from Q1 to Q2 units, of which none imported! As International bank for Reconstruction and Development if elasticity of demand does affect..., in a market with no externalities, a ) Minimum wage laws make employers worse off others off.

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