ECO 202:ECO 202 Price Elasticity of Demand Exam Review:Questions & Answers: Updated Solution

ECO 202 Price Elasticity of Demand Exam
Review


1. Price elasticity of demand measures:
A) Change in income
B) Responsiveness of quantity demanded to price change
C) Shift in supply
D) Change in cost

Answer: B




2. If elasticity = 0.3, demand is:
A) Elastic
B) Inelastic
C) Unit elastic
D) Perfectly elastic

Answer: B




3. If elasticity = 2.2, demand is:
A) Inelastic
B) Elastic
C) Unit elastic
D) Zero elastic

Answer: B




4. If price rises by 10% and elasticity = 2, quantity demanded will:

, A) Fall by 20%
B) Fall by 2%
C) Rise by 20%
D) Not change

Answer: A




5. If price falls by 15% and elasticity = 0.5, quantity demanded will:
A) Rise by 7.5%
B) Rise by 15%
C) Rise by 30%
D) Fall by 7.5%

Answer: A




6. If elasticity = 1, demand is:
A) Elastic
B) Inelastic
C) Unit elastic
D) Perfectly inelastic

Answer: C




7. A perfectly inelastic demand curve is:
A) Horizontal
B) Vertical
C) Downward sloping
D) Upward sloping

Answer: B




8. A perfectly elastic demand curve is: