1.

(Points: 1)  
If price rises from £9 to £11 and as a result quantity demanded falls from 16 units to 14 units, then, using
the mid-point formula, the price elasticity of demand is

a. -1

 
b. -1.5

c. -0.67

d. -0.13

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2.
(Points: 1)  
The following table refers to the market demand for flour

Quantity demanded Price

(kgs) (pence per bag)
60 10
50 20
40 30
30 40
20 50

Which of the following answers is correct for price elasticity of demand (using the mid-point method) as price
changes from 30p per kg to 40p per kg?

a. -1

b. -1.33

c. -0.75

d. -0.29

e. -10

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3.
(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. inelastic.

b. elastic.

c. perfectly elastic.

d. perfectly inelastic.

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4.
(Points: 1)  
Equilibrium is the condition that exists when

a. when quantity demanded equals quantity supplied.

  b. when the demand curve intersects the price axis.

c. there is no government intervention in a market.

d. when the demand curve intersects the quantity axis.

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5.
(Points: 1)  
A downward-sloping straight-line demand curve will

a. be inelastic over its whole length.

b. become more elastic as price rises.

 
c. have unit elasticity over its whole length.

d. be elastic over its whole length.

e. become less elastic as price rises.

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6.
(Points: 1)  
 Price elasticity of demand is the

a. ratio of the change in quantity demanded to the change in price.

  b. ratio of the percentage change in quantity demanded to the percentage change in price.

c. ratio of the percentage change in price to the percentage change in quantity demanded.

d. ratio of the change in price to the change in quantity demanded.

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7.
(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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8.
(Points: 1)  
If speculation is destablising, a change in price resulting from a rise in demand will result in

a. a further rise in demand and a fall in supply.

  b. a fall in demand and a fall in supply.

c. a further rise in demand and a rise in supply.

d. a fall in demand and a rise in supply.

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9.
(Points: 1)  
The price elasticity of demand for holidays in Greece is likely to be high because

a. there are plenty of different foreign holidays to choose from.

b. foreign holidays are becoming much cheaper.

 
c. people need a holiday if they are to cope with the year ahead.

d. people tend to book up a long time in advance.

e. holidays at home provide no real alternative.

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10.
(Points: 1)  
The price elasticity of supply of butter is 0.2 and a guaranteed price is originally set at 100 and the quantity
produced is 1000 tonnes. Which of the following quantities will represent the planned level of production for
butter if the guaranteed price is reduced by 10%?

a. 800 tonnes
 

b. 20 tonnes

c. 200 tonnes

d. 980 tonnes