1) Mr. Wong spends $500 on buying oranges every month regardless of price. To Mr. Wong, the elasticity of demand for oranges is

(a) zero.
(b) one.
(c) greater than one.
(d) smaller than one.

2) Suppose the demand for TV sets is elastic, a decrease in price of TV sets will increase the TV sets _____ and the total revenue of TV sets will _____.

(a) quantity demanded ...... increase
(b) quantity demanded ...... decrease
(c) demand ...... increase
(d) demand ......decrease

3) After typhoon, surprisingly it is found that the farmers' income was increased. It was because the supply of vegetables _____ and the demand for vegetables was _____.

(a) increase ...... elastic
(b) increase ...... inelastic
(c) decrease ......elastic
(d) decrease ...... inelastic

4) The following shows the demand for good X in a certain period of time:

Which of the following statements about good X is correct?

(a) The elasticity of demand for good X is greater than one.
(b) The elasticity of demand for good X is smaller than one.
(c) The elasticity of demand for good X is equal to zero.
(d) The elasticity of demand for good X is equal to one.

5) Good X and good Y are substitutes. Suppose the price of good X is increased by 10%, while the price of good Y remains unchanged. Which of the following statements is correct?

(a) The total revenue of good X may increase or decrease but the total revenue of good Y will increase.
(b) Both the total revenue of good X and good Y will increase
(c) The total revenue of good X may increase or decrease but the total revenue of good Y will decrease
(d) The total revenue of good X will increase but the total revenue of good Y will decrease

6) The demand for good X is perfectly inelastic. If the government imposes a per unit tax on good X produced, the total expenditure on good X will

(a) remain unchanged.
(b) increase
(c) decrease
(d) either increase or decrease

7) It is found that the percentage increase in price of good X is 4.2% and the percentage decrease in quantity demanded is 8.3%. Which of the following statements about good X is correct?

(a) The increase in price leads an increase in total revenue of good X.
(b) The increase in price leads an decrease in total revenue of good X
(c) The elasticity of demand for good X is 0.5.
(d) The total revenue of good X is 34.86 for such a price change.

8) Suppose the demand for good Y is inelastic. Study the following information about good Y  carefully:

The value of x

(a) greater than 225
(b) is less than 150.
(c) must lie between 150 and 225.
(d) cannot be found.

9) The demand for good X is inelastic. If the government imposes an effective quota on good X, then the market price of good X will _____ and the total revenue of good X will _____.

(a) increase ...... increase
(b) increase ....... decrease
(c) decrease ...... increase
(d) decrease ...... decrease

10) Suppose the government offers a subsidy of $5 for each unit of good X produced, it is found that the equilibrium price of good X is decreased by $5. We can conclude that the demand for good X is _____ and the total expenditure on good X is ______.

(a) perfectly elastic ...... increased
(b) perfectly elastic ...... decreased
(c) perfectly inelastic ...... increased
(d) perfectly inelastic ...... decreased