Tackle the Test: Multiple-Choice Questions

1. Question

   A perfectly elastic demand curve is

   A.

   upward-sloping.

   B.

   vertical.

   C.

   not a straight line.

   D.

   horizontal.

   E.

   downward-sloping.

   A perfectly elastic demand curve is

2. Question

   Which of the following would cause the demand for a good to be relatively inelastic?

   A.

   The good has a large number of close substitutes.

   B.

   Expenditures on the good represent a large share of consumer income.

   C.

   There is ample time to adjust to price changes.

   D.

   The good is a necessity.

   E.

   The price of the good is in the upper left section of a linear demand curve.

   Which of the following would cause the demand for a good to be relatively inelastic?

3. Question

   Which of the following is true if the price elasticity of demand for a good is zero?

   A.

   The slope of the demand curve is zero.

   B.

   The slope of the demand curve is one.

   C.

   The demand curve is vertical.

   D.

   The demand curve is horizontal.

   E.

   The price of the good is high.

   Which of the following is true if the price elasticity of demand for a good is zero?

4. Question

   Which of the following is correct for a price increase?
   When demand is ______, total revenue will ______ .
   DemandTotal Revenue

   A.

   inelasticdecrease

   B.

   elasticdecrease

   C.

   unit-elasticincrease

   D.

   unit-elasticdecrease

   E.

   elasticincrease

   Which of the following is correct for a price increase?

5. Question

   Total revenue is maximized when demand is

   A.

   elastic.

   B.

   inelastic.

   C.

   unit-elastic.

   D.

   zero.

   E.

   infinite.

   Total revenue is maximized when demand is