Question 1

Table 5-6
  
-Refer to Table 5-6.Using the midpoint method,the income elasticity of demand for good Y is

Accepted Answer

A)  2.33,and good Y is a normal good. 
B)  -2.33,and good Y is an inferior good. 
C)  -0.43,and good Y is a normal good. 
D)  -0.43,and good Y is an inferior good. 
A)  2.33,and good Y is a normal good. 
B)  -2.33,and good Y is an inferior good. 
C)  -0.43,and good Y is a normal good. 
D)  -0.43,and good Y is an inferior good.

Question 2

When her income increased from $10,000 to $20,000,Heather's consumption of macaroni decreased from 10 pounds to 5 pounds and her consumption of soy-burgers increased from 2 pounds to 4 pounds.We can conclude that for Heather,macaroni

Accepted Answer

A)  and soy-burgers are both normal goods with income elasticities equal to 1. 
B)  is an inferior good and soy-burgers are normal goods;both have income elasticities of 1. 
C)  is an inferior good with an income elasticity of -1 and soy-burgers are normal goods with an income elasticity of 1. 
D)  and soy-burgers are both inferior goods with income elasticities equal to -1. 
A)  and soy-burgers are both normal goods with income elasticities equal to 1. 
B)  is an inferior good and soy-burgers are normal goods;both have income elasticities of 1. 
C)  is an inferior good with an income elasticity of -1 and soy-burgers are normal goods with an income elasticity of 1. 
D)  and soy-burgers are both inferior goods with income elasticities equal to -1.

Question 3

Figure 5-2  
-Refer to Figure 5-2.Using the midpoint method,what is the price elasticity of supply between $4 and $5?

Accepted Answer

A)  0.50 
B)  0.56 
C)  1.80 
D)  2.00 
A)  0.50 
B)  0.56 
C)  1.80 
D)  2.00

Question 4

In the case of perfectly inelastic demand,

Accepted Answer

A)  the change in quantity demanded equals the change in price. 
B)  the percentage change in quantity demanded equals the percentage change in price. 
C)  infinitely-large changes in quantity demanded result from very small changes in the price. 
D)  quantity demanded stays the same whenever price changes. 
A)  the change in quantity demanded equals the change in price. 
B)  the percentage change in quantity demanded equals the percentage change in price. 
C)  infinitely-large changes in quantity demanded result from very small changes in the price. 
D)  quantity demanded stays the same whenever price changes.

Question 5

Figure 5-12  
-Refer to Figure 5-12.Total revenue when the price is P1 is represented by the area(s)

Accepted Answer

A)  B + D. 
B)  A + B. 
C)  C + D. 
D)  D. 
A)  B + D. 
B)  A + B. 
C)  C + D. 
D)  D.

Question 6

Necessities tend to have inelastic demands,whereas luxuries tend to have elastic demands.

Accepted Answer

A) True 
 B)False

Question 7

If the income elasticity of demand for a good is -1.40,is the good a normal or inferior good?

Accepted Answer

The good i

Question 8

The price elasticity of demand measures the

Accepted Answer

A)  magnitude of the response in quantity demanded to a change in price. 
B)  direction of the shift in the demand curve in response to a market event. 
C)  size of the shortage created by the increase in demand. 
D)  responsiveness of quantity demanded to a change in income. 
A)  magnitude of the response in quantity demanded to a change in price. 
B)  direction of the shift in the demand curve in response to a market event. 
C)  size of the shortage created by the increase in demand. 
D)  responsiveness of quantity demanded to a change in income.

Question 9

If a 20% change in price results in a 15% change in quantity supplied,then the price elasticity of supply is about

Accepted Answer

A)  1.33,and supply is elastic. 
B)  1.33,and supply is inelastic. 
C)  0.75,and supply is elastic. 
D)  0.75,and supply is inelastic. 
A)  1.33,and supply is elastic. 
B)  1.33,and supply is inelastic. 
C)  0.75,and supply is elastic. 
D)  0.75,and supply is inelastic.

Question 10

In general,demand curves for necessities tend to be price elastic.

Accepted Answer

A) True 
 B)False

Question 11

Figure 5-11  
-Refer to Figure 5-11.Using the midpoint method,the price elasticity of demand between point C and point D is about

Accepted Answer

A)  0.29. 
B)  0.54. 
C)  1.86. 
D)  2.0. 
A)  0.29. 
B)  0.54. 
C)  1.86. 
D)  2.0.

Question 12

Good news for farming can be bad news for farmers because the

Accepted Answer

A)  supply curve for an individual farmer is usually perfectly elastic. 
B)  supply curve for an individual farmer is usually perfectly inelastic. 
C)  demand for basic foodstuffs is usually inelastic,meaning that factors that shift supply to the right decrease total revenues to sellers. 
D)  demand for basic foodstuffs is usually elastic,meaning that factors that shift supply to the right increase total revenues to sellers. 
A)  supply curve for an individual farmer is usually perfectly elastic. 
B)  supply curve for an individual farmer is usually perfectly inelastic. 
C)  demand for basic foodstuffs is usually inelastic,meaning that factors that shift supply to the right decrease total revenues to sellers. 
D)  demand for basic foodstuffs is usually elastic,meaning that factors that shift supply to the right increase total revenues to sellers.

Question 13

When demand is unit elastic,price elasticity of demand equals

Accepted Answer

A)  1,and total revenue and price move in the same direction. 
B)  1,and total revenue and price move in opposite directions. 
C)  1,and total revenue does not change when price changes. 
D)  0,and total revenue does not change when price changes. 
A)  1,and total revenue and price move in the same direction. 
B)  1,and total revenue and price move in opposite directions. 
C)  1,and total revenue does not change when price changes. 
D)  0,and total revenue does not change when price changes.

Question 14

Suppose demand is given by the equation:   Using the midpoint method,what is the price elasticity of demand between $1 and $2?

Accepted Answer

The price

Question 15

Figure 5-14  
-Refer to Figure 5-14.Using the midpoint method,what is the price elasticity of supply between points D and G?

Accepted Answer

A)  1.89 
B)  1.26 
C)  0.53 
D)  0.34 
A)  1.89 
B)  1.26 
C)  0.53 
D)  0.34

Question 16

Figure 5-3  
-Refer to Figure 5-3.Which demand curve is perfectly inelastic?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 17

A key determinant of the price elasticity of supply is

Accepted Answer

A)  the ability of sellers to change the price of the good they produce. 
B)  the ability of sellers to change the amount of the good they produce. 
C)  how responsive buyers are to changes in sellers' prices. 
D)  the slope of the demand curve. 
A)  the ability of sellers to change the price of the good they produce. 
B)  the ability of sellers to change the amount of the good they produce. 
C)  how responsive buyers are to changes in sellers' prices. 
D)  the slope of the demand curve.

Question 18

In the long run,the quantity supplied of most goods

Accepted Answer

A)  will increase in almost all cases,regardless of what happens to price. 
B)  cannot respond at all to a change in price. 
C)  can respond to a change in price,but the change is almost always inconsequential. 
D)  can respond substantially to a change in price. 
A)  will increase in almost all cases,regardless of what happens to price. 
B)  cannot respond at all to a change in price. 
C)  can respond to a change in price,but the change is almost always inconsequential. 
D)  can respond substantially to a change in price.

Question 19

The midpoint method is used to calculate elasticity between two points because it gives the same answer regardless of the direction of the change.

Accepted Answer

A) True 
 B)False

Question 20

A key determinant of the price elasticity of supply is the

Accepted Answer

A)  number of close substitutes for the good in question. 
B)  extent to which buyers alter their quantities demanded in response to changes in prices. 
C)  length of the time period. 
D)  extent to which buyers alter their quantities demanded in response to changes in their incomes. 
A)  number of close substitutes for the good in question. 
B)  extent to which buyers alter their quantities demanded in response to changes in prices. 
C)  length of the time period. 
D)  extent to which buyers alter their quantities demanded in response to changes in their incomes.

Exam 5: Elasticity and Its Application

Table 5-6 -Refer to Table 5-6.Using the midpoint method,the income elasticity of demand for good Y is

When her income increased from $10,000 to $20,000,Heather's consumption of macaroni decreased from 10 pounds to 5 pounds and her consumption of soy-burgers increased from 2 pounds to 4 pounds.We can conclude that for Heather,macaroni

Figure 5-2 -Refer to Figure 5-2.Using the midpoint method,what is the price elasticity of supply between $4 and $5?

In the case of perfectly inelastic demand,

Figure 5-12 -Refer to Figure 5-12.Total revenue when the price is P1 is represented by the area(s)

Necessities tend to have inelastic demands,whereas luxuries tend to have elastic demands.

If the income elasticity of demand for a good is -1.40,is the good a normal or inferior good?

The price elasticity of demand measures the

If a 20% change in price results in a 15% change in quantity supplied,then the price elasticity of supply is about

In general,demand curves for necessities tend to be price elastic.

Figure 5-11 -Refer to Figure 5-11.Using the midpoint method,the price elasticity of demand between point C and point D is about

Good news for farming can be bad news for farmers because the

When demand is unit elastic,price elasticity of demand equals

Suppose demand is given by the equation: Using the midpoint method,what is the price elasticity of demand between $1 and $2?

Figure 5-14 -Refer to Figure 5-14.Using the midpoint method,what is the price elasticity of supply between points D and G?

Figure 5-3 -Refer to Figure 5-3.Which demand curve is perfectly inelastic?

A key determinant of the price elasticity of supply is

In the long run,the quantity supplied of most goods

The midpoint method is used to calculate elasticity between two points because it gives the same answer regardless of the direction of the change.

A key determinant of the price elasticity of supply is the

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Supply,demand,and Government Policies

Consumers,producers,and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Market for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving,investment,and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomic Models

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters

Figure 5-12 -Refer to Figure 5-12.Total revenue when the price is P₁ is represented by the area(s)