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Microeconomics Practice Test - 3: Measurement of Elasticities

##### Click on the correct option. Text colour will change into green if your chosen option is corret and if it is wrong, it will change into red:

- If the percentage increase in the quantity of a commodity demanded is smaller than the percentage fall in its price, the coefficient of price elasticity of demand is

- greater than 1

- equal to 1

- smaller than 1

- zero

- If the quantity of a commodity demanded remains unchanged as its price changes, the coefficient of price elasticity of demand is

- greater than 1

- equal to 1

- smaller than 1

- zero

- Arc elasticity gives a better estimate of point elasticity of a curvilinear demand curve as

- the size of the arc becomes smaller

- the curvature of the demand curve over the arc becomes less

- both of the above

- neither of the above

- If a straight-line demand curve is tangent to a curvilinear demand curve, the elasticity of the two demand curves at the point of tangency is

- the same

- different

- can be the same or different

- it depends on the location of the point of tangency

- An increase in the price of a commodity when demand is inelastic causes the total expenditures of consumers of the commodity to

- increase

- decrease

- remain unchanged

- any of the above

- A fall in the price of a commodity whose demand curve is a rectangular hyperbola causes total expenditures on the commodity to

- increase

- decrease

- remain unchanged

- any of the above

- A negative income elasticity of demand for a commodity indicates that as income falls, the amount of the commodity purchased

- rises

- falls

- remains unchanged

- any of the above

- If the income elasticity of demand is greater than 1, the commodity is

- a necessity

- a luxury

- an inferior good

- a nonrelated good

- If the amounts of two commodities purchased both increase or decrease when the price of one changes, the cross elasticity of demand between them is

- negative

- positive

- zero

- 1

- If the amount of a commodity purchased remains unchanged when the price of another commodity changes, the cross elasticity of demand between them is

- negative

- positive

- zero

- 1

- es for a positively sloped straight-line supply curve that intersects the price axis is

- equal to zero

- equal to 1

- greater than 1

- constant

- Which of the following elasticities measure a movement along a curve rather than a shift in the curve?

- The price elasticity of demand

- The cross elasticity of demand

- The income elasticity of demand

- The price elasticity of supply

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