Principles Of Microeconomics Worksheet With Answer Key - 2007

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E203, Principles of Microeconomics
Quiz #3, Fall 2007
Name___________________________________
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question on the
accompanying scantron.
1) The price elasticity of demand equals the magnitude of
1)
A) the slope of the demand curve.
B) the percentage change in the price of a good divided by the percentage change in the
quantity demanded.
C) the inverse of the slope of the demand curve.
D) the percentage change in the quantity demanded of a good divided by the percentage
change in its price.
2) When the price of a movie ticket increases from $5 to $7, the quantity of tickets demanded
2)
decreases from 600 to 400 a day. What is the price elasticity of demand for movie tickets?
A) 2.32
B) 1.20
C) 1.00
D) 0.83
3) A local pizzeria raised its price from $9 to $11 for each pizza and the sales of its pizza
3)
decreased from 150 to 100 per day. What is the price elasticity of demand in this case?
A) -1/2
B) 1/2
C) -2
D) 2
4) If the demand for a good is elastic, that means that when price increases
4)
A) the quantity demanded will decrease by a greater percentage than the price increased.
B) the quantity demanded will decrease by a smaller percentage than the price increased.
C) the demand will decrease.
D) the quantity demanded will increase.
5) When the percentage change in the quantity demanded is less than the percentage change in
5)
the price, then
A) demand is unit elastic.
B) demand is elastic.
C) demand is inelastic.
D) the good is an inferior good.
6) If the demand curve is a downward sloping straight line, the price elasticity of demand always
6)
A) decreases with movements upward to the left along the demand curve.
B) increases as the demand curve shifts leftward.
C) increases with movements upward to the left along the demand curve.
D) increases as the demand curve shifts rightward.
7) According to the total revenue test, a price cut increases total revenue if demand is
7)
A) inelastic.
B) elastic.
C) perfectly inelastic.
D) unit elastic.
1

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