1.

(Points: 1)  
In a country where the price elasticity of demand for foods is low, if a buffer-stock scheme were used to
stabilise ________ it would have to ________.

a. prices, buy when harvests were bad and sell when harvests were good

 
b. farmers' incomes, buy when prices were high and sell when prices were low

c. prices, buy when prices were high and sell when prices were low

d. farmers' incomes, buy when harvests were good and sell when harvests were bad

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2.
(Points: 1)  
If the quantity demanded 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. elastic.

 
b. inelastic.

c. perfectly inelastic.

d. perfectly elastic.

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3.
(Points: 1)  
The adjustment of ________ is the rationing mechanism in free markets

a. price

  b. quantity

c. demand

d. supply

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4.
(Points: 1)  
The following table refers to the demand conditions of commodity X.

Quantity demanded Price

(kgs) (pence)
40 1
35 2
25 3
15 4
5 5

Which of the following answers is correct for price elasticity of demand (using the mid-point method) as price
changes from 3p per kg to 2p per kg?

a. -1.75

b. -0.86

c. -0.83

d. -0.57

e. -1.2

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5.
(Points: 1)  
The price of apples falls by 5% and the quantity demanded increases by 10%. This means that the price
elasticity of demand for apples is

a. perfectly elastic.

 
b. inelastic.

c. elastic.

d. perfectly inelastic.

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6.
(Points: 1)  
  Racketeers selling tickets for a pop concert will be successful
 a. any time the pop group is popular.

b. when prices are too high.

c. when the price set by the concert hall is less than the market equilibrium price.

d. only when there is excess supply.

e. A, B and C

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7.
(Points: 1)  
Which one of the following is true of the long run?

a. Demand and supply are less elastic with respect to price than in the short run.

  b. Demand is more elastic and supply is less elastic with respect to price than in the short run.

c. Demand and supply are more elastic with respect to price than in the short run.

d. Demand is less elastic and supply is more elastic with respect to price than in the short run.

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8.
(Points: 1)  
If a tax is imposed on a good, then for any given original level of sales, tax revenue will be highest when

a. price elasticity of demand and supply are high.

  b. price elasticity of demand is low and price elasticity of supply is high.

c. price elasticity of demand and supply are low.

d. price elasticity of demand is high and price elasticity of supply is low.

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9.
(Points: 1)  
A downward-sloping straight-line demand curve will

a. be elastic over its whole length.

b. have unit elasticity over its whole length.

 
c. become less elastic as price rises.

d. be inelastic over its whole length.

e. become more elastic as price rises.

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10.
(Points: 1)  
The average or 'mid-point' formula for price elasticity of demand is

a. (midQQ) / (midPP)

 
b. (midPP) / (midQQ)

c. P/midP) / Q/midQ)

d. Q/midQ) / P/midP)