Lesson 2.6.1

2.6.1 Price elasticity of demand and total revenue Quiz: OCR Economics, Unit 2

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 2.6.1, Price elasticity of demand and total revenue: 20 multiple choice questions for the OCR Economics (H460), Unit 2: The role of markets, written with Revision Ninja.

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The 20 questions

  1. What is the formula used to calculate price elasticity of demand?

    • %ΔQD ÷ %ΔP
    • %ΔTR ÷ %ΔP
    • %ΔQD ÷ %ΔY
    • %ΔP ÷ %ΔQD

  2. Which formula is used to calculate total revenue for a firm?

    • Price + Quantity
    • Price × Quantity
    • Price ÷ Quantity
    • Profit × Price

  3. What numeric value indicates that demand for a good is price elastic?

    • Greater than 1
    • Less than 1
    • Equal to 1
    • Equal to 0

  4. What is the numerical coefficient for perfectly inelastic demand?

    • Negative one
    • One
    • Zero
    • Infinity

  5. What happens to total revenue when price changes for a unit elastic product?

    • Decreases
    • Remains unchanged
    • Increases
    • Falls to zero

  6. What happens to total revenue when price increases for a product with elastic demand?

    • Total revenue falls
    • Revenue remains constant
    • Profit becomes zero
    • Total revenue rises

  7. What is the price elasticity of demand at the midpoint of a straight-line demand curve?

    • Relatively elastic
    • Unit elastic
    • Perfectly inelastic
    • Perfectly elastic

  8. If a 10% price increase leads to a 20% drop in demand, what is PED?

    • -2
    • -0.5
    • -20
    • -2%

  9. If PED is -0.5 and price increases by 8%, by how much does demand change?

    • Falls by 0.5%
    • Rises by 4%
    • Falls by 4%
    • Falls by 16%

  10. Price rises to £6 and 90 units are sold. What is the new total revenue?

    • £540
    • £500
    • £600
    • £450

  11. A train company cuts fares by 5% and passenger revenue rises. Demand is:

    • Price inelastic
    • Price elastic
    • Perfectly inelastic
    • Unit elastic

  12. To increase total revenue, a producer of a good with PED of -0.4 should:

    • Stop production
    • Cut price
    • Raise price
    • Keep price fixed

  13. Which factor makes the price elasticity of demand for a good more elastic?

    • High necessity
    • Habit-forming nature
    • Short time period
    • Many close substitutes

  14. Over a longer time period, how does price elasticity of demand usually change?

    • Becomes more elastic
    • Becomes zero
    • Remains unchanged
    • Becomes more inelastic

  15. Initial TR is £1,000. Price rises, demand drops, and new TR is £1,200. Demand was:

    • Perfectly elastic
    • Unit elastic
    • Inelastic
    • Elastic

  16. What is marginal revenue when total revenue is maximised along a demand curve?

    • Greater than zero
    • Infinity
    • One
    • Zero

  17. Moving down a straight-line demand curve from top-left to bottom-right, elasticity:

    • Increases
    • Decreases
    • Stays constant
    • Equals zero throughout

  18. What is the shape of a demand curve with a constant PED of -1 throughout?

    • Vertical straight line
    • Rectangular hyperbola
    • Horizontal straight line
    • Downward straight line

  19. Price falls by 10% and quantity demanded increases by 10%. Total revenue approximately:

    • Falls slightly
    • Increases by 1%
    • Doubles
    • Increases by 10%

  20. If a firm lowers the price of a price inelastic good, what happens to total revenue?

    • It increases
    • It decreases
    • It stays constant
    • It doubles

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