Price Elasticity of Demand 1 - A Level Economics MCQ Quiz

Question 1/10

A bakery reduces the price of a pack of bread rolls from £2.00 to £1.60. As a result, weekly sales rise from 500 to 550 packs. What is the price elasticity of demand for these bread rolls?

0.5 -0.5 -0.2 -2.0 -1.5

Question 2/10

A supermarket cuts the price of a pack of coffee from £5.00 to £4.00. As a result, weekly sales rise from 1,000 to 1,250 packs. What is the price elasticity of demand for this coffee?

-1.75 -1.25 -0.8 0.2 1.25

Question 3/10

800 units of a good are demanded at a price of £25. If the price elasticity of demand is -1.2, what is the level of demand when the price rises to £30?

576 608 640 760 992

Question 4/10

The price elasticity of demand for a local gym's membership is -0.3. If the gym raises its membership price, its total revenue will

stay exactly the same. rise. rise by more than the percentage price increase. fall. fall by more than the percentage price increase.

Question 5/10

If the price elasticity of demand for a good is exactly -1 (unitary), and its price rises by 8%, what will happen to total revenue?

It will fall by 8%. It will remain unchanged. It will rise by more than 8%. It will rise by 8%. It will fall by more than 8%.

Question 6/10

A budget gym chain raises its monthly membership fee. If demand for memberships at this chain is price inelastic, this price rise will:

Decrease total revenue, because demand is price inelastic. Decrease total revenue, because demand is price elastic. Keep total revenue the same, because demand is unitary elastic. Increase total revenue, because demand is price inelastic. Increase total revenue, because demand is price elastic.

Question 7/10

A market stallholder sells 60 scarves at £8 each on Saturday. On Sunday, they raise the price to £10 and sell 50 scarves. What was the difference in revenue between Saturday and Sunday?

£480 decrease £20 increase £100 increase £20 decrease £200 decrease

Question 8/10

The demand for a staple food such as rice is close to perfectly price inelastic in a low-income country. If the government introduces a subsidy on rice, the market price of rice will

rise, as producers keep the subsidy as extra profit. not change at all. fall by only a small fraction of the subsidy per unit. fall by close to the full amount of the subsidy per unit. fall by more than the full amount of the subsidy per unit.

Question 9/10

A DIY retailer has experimented with changing the prices of various tools sold in their store. The table below shows the price of each tool in two years.

	Year 1	Year 2
Hammers	£8	£9
Screwdrivers	£5	£4
Drills	£45	£50
Paintbrushes	£3.50	£3.00

Other things being equal, which one of the following changes from Year 1 to Year 2 is the retailer most likely to experience?

A decrease in revenue from paintbrushes if the price elasticity of demand is elastic. An increase in revenue from drills if the price elasticity of demand is inelastic. An increase in revenue from hammers if the price elasticity of demand is elastic. A decrease in revenue from hammers if the price elasticity of demand is inelastic. A decrease in revenue from screwdrivers if the price elasticity of demand is minus one.

Question 10/10

A government report found that a 20% rise in the price of standard rail season tickets led to a 5% fall in demand from commuters travelling for work, and an 8% fall in demand from occasional leisure travellers. It can be concluded from this that demand for rail season tickets is

price elastic for both commuters and leisure travellers. price inelastic for commuters and price elastic for leisure travellers. impossible to assess without knowing each group's income level. price inelastic for both commuters and leisure travellers. price elastic for commuters and price inelastic for leisure travellers.