ECON100 Mock Test
Multiple Choice Questions
Select the correct answer and give your reason or show your working. Type the correct answer
and your reason in the space provided.
1) If 50 units are sold at a price of $20 and 80 units are sold at a price of $15, what is the
absolute value of the price elasticity of demand? Use the midpoint formula.
A) 0.17
B) 0.62
C) 1.62
D) 5
Answer: c)1.62
Reason: mid-point formula= (Q2-Q1/Q2+Q1)/2/(P2-P1/P2+P1)/2
(80-50/80+50)/2/(15-20/15+20)/2
(30/130)/2/(-5/35)/2
0.12/-0.07
1.71
1.71 is closest to 1.62, thus ans= 1.62
2) If a 35 per cent increase in the price of golf balls led to a 42 per cent decrease in quantity
