Foundation Course in Managerial Economics: MOOC: Week2
Multiple choice questions
Marks: 10
1. Using the midpoint method, calculate the price elasticity of demand for ice cream cones in the
market if, when P = ₹70, Qd = 5000 if P = ₹90, Qd = 3000
A. 0.5
B. 2.5
C. 2.0
D. 12.5
2. If the price elasticity of demand for a good is 0.2, then a 3 percent decrease in price results in
A. 0.6 percent increase in the quantity demanded
B. 1.5 percent increase in the quantity demanded
C. 2 percent increase in the quantity demanded
D. 6 percent increase in the quantity demanded
3. What is a possible example of a good with negative income elasticity?
A. Poorer quality rice
B. High quality rice
C. Hotels
D. Cars
4. The supply of my seven old and rare coins collection is
A. Perfectly elastic
B. Perfectly inelastic
C. Unit elastic
D. None of the above
5. As a result of a fare war, business class airfare falls by 20%. As a result
A. Since demand is elastic, revenue rises B. Since
supply is inelastic so revenue falls
C. Since demand is elastic revenue falls
D. Since demand is inelastic revenue falls
6. Which of the following is generally true
A. A flatter supply curve implies inelastic supply
B. A steeper demand curve implies elastic demand
C. A steeper demand curve implies inelastic supply D.
A steeper demand curve implies inelastic demand
7. Which of the following statements is true?
A. Price elasticity of supply is greater in the long run than in the short run
B. Price elasticity of supply is smaller in the long run than in the short run
C. Price elasticity of demand is smaller in the long run than in the short run
D. Price elasticity will be small only when supply elasticity is small
8. The new headline - “Oil Prices Drive Students to Online Courses” is an example of
A. Income elasticity of demand
B. Cross price elasticity of demand
C. Own price elasticity of supply
D. None of the above
9. Which of the following is incorrect: Demand is less elastic
A. in the short run
B. for necessities
C. for narrowly defined goods D. and for goods with few close substitutes
10. Perfectly elastic supply curve is:
A. Horizontal at a given P
B. Vertical at a given Q
C. Through the origin at 450 angle
D. Has unit elasticity