Online Test — Elasticity of Demand
15 Questions • 15 min • Chapter MCQ
15:00
Question 1 of 15
Price elasticity of demand measures the responsiveness of quantity demanded to a change in:
Income
Price
Supply
Population
Explanation: It relates quantity demanded to price changes.
Question 2 of 15
The elasticity formula is % change in quantity ÷ % change in:
Income
Price
Cost
Population
Explanation: E = %ΔQ ÷ %ΔP.
Question 3 of 15
If E > 1, demand is:
Inelastic
Elastic
Unit elastic
Perfectly inelastic
Explanation: E greater than 1 means elastic.
Question 4 of 15
If E < 1, demand is:
Elastic
Inelastic
Unit elastic
Perfectly elastic
Explanation: E less than 1 means inelastic.
Question 5 of 15
If E = 1, demand is:
Unit elastic
Inelastic
Perfectly elastic
Perfectly inelastic
Explanation: E equal to 1 is unit elastic.
Question 6 of 15
A horizontal demand curve shows demand that is:
Perfectly elastic
Perfectly inelastic
Unit elastic
Inelastic
Explanation: A horizontal curve = perfectly elastic (E = ∞).
Question 7 of 15
A vertical demand curve shows demand that is:
Perfectly elastic
Perfectly inelastic
Elastic
Unit elastic
Explanation: A vertical curve = perfectly inelastic (E = 0).
Question 8 of 15
If a 20% fall in price raises quantity by 40%, the elasticity is:
0.5
2
1
20
Explanation: E = 40% ÷ 20% = 2.
Question 9 of 15
The percentage method uses the ____ price and quantity.
Original
Final
Average
Future
Explanation: It uses the original P and Q.
Question 10 of 15
Total expenditure equals:
Price × Quantity
Price ÷ Quantity
Price + Quantity
Quantity − Price
Explanation: Total expenditure (outlay) = P × Q.
Question 11 of 15
If a fall in price raises total expenditure, demand is:
Elastic
Inelastic
Unit elastic
Zero
Explanation: Price and total expenditure moving oppositely means elastic.
Question 12 of 15
If total expenditure stays the same when price changes, demand is:
Elastic
Unit elastic
Inelastic
Perfectly elastic
Explanation: Unchanged total expenditure = unit elastic.
Question 13 of 15
More substitutes available for a good make its demand:
More elastic
Less elastic
Unit elastic
Perfectly inelastic
Explanation: Easy substitution raises elasticity.
Question 14 of 15
Necessities like salt tend to have demand that is:
Elastic
Inelastic
Perfectly elastic
Unit elastic
Explanation: Necessities are inelastic — bought regardless of price.
Question 15 of 15
Over a longer time period, demand usually becomes:
More elastic
Less elastic
Perfectly inelastic
Unchanged
Explanation: Given time, consumers find alternatives, so demand is more elastic in the long run.