Question

Q1:if the price of pizza rises from $10 to $11 and pizza purchases fall from 20 to 15 pizzas, the elasticity of demand is

a)

-5

b)

-3

c)

-1/2

d)

-1

Q2:over time, the elasticities of both demand and supply become

a)	unit elastic

b)	more inelastic

c)	mnore elastic

d)	both elasticities become negative

Q3:if the income elasticity of demand is 5, this means

a)	if income rises 5%, quantity demanded rises 1%

b)	for a 1% rise in income, quantity demanded falls 5%

c)	if income rises 5%, quantity demanded falls 1%

d)	for a 1% increase in income, quantity demanded rises 5%

Q4:elastic demand means

a)	the good has many substitutes

b)	the good is fixed in production

c)	the good is difficult to produce

d)	the elasticity of demand is positive

Q5:producer surplus is most closely related to

a)

savings

b)

profit

c)	marginal benefit

d)

losses