Question 1

If the price elasticity of supply is 0.2,and a price increase led to a 3% increase in quantity supplied,then the price increase is about

Accepted Answer

A)  0.07%. 
B)  0.60%. 
C)  6%. 
D)  15%. 
A)  0.07%. 
B)  0.60%. 
C)  6%. 
D)  15%.

Question 2

Table 5-6
  
-Refer to Table 5-6.Which scenario describes the market for oil in the short run in comparison to the long run?

Accepted Answer

A)  Scenario A describes both the short run and the long run. 
B)  Scenario D describes both the short run and the long run. 
C)  Scenario D describes the short run,whereas scenario A describes the long run. 
D)  Scenario C describes the short run,whereas scenario B describes the long run. 
A)  Scenario A describes both the short run and the long run. 
B)  Scenario D describes both the short run and the long run. 
C)  Scenario D describes the short run,whereas scenario A describes the long run. 
D)  Scenario C describes the short run,whereas scenario B describes the long run.

Question 3

Figure 5-4  
-Refer to Figure 5-4.If the price decreases in the region of the demand curve between points A and B,we can expect total revenue to

Accepted Answer

A)  increase. 
B)  stay the same. 
C)  decrease. 
D)  first decrease,then increase until total revenue is maximized. 
A)  increase. 
B)  stay the same. 
C)  decrease. 
D)  first decrease,then increase until total revenue is maximized.

Question 4

Get Smart University is contemplating an increase in tuition to enhance revenue.If GSU feels that raising tuition would enhance revenue,it is

Accepted Answer

A)  ignoring the law of demand. 
B)  assuming that the demand for university education is elastic. 
C)  assuming that the demand for university education is inelastic. 
D)  assuming that the supply of university education is elastic. 
A)  ignoring the law of demand. 
B)  assuming that the demand for university education is elastic. 
C)  assuming that the demand for university education is inelastic. 
D)  assuming that the supply of university education is elastic.

Question 5

Figure 5-16  
-Refer to Figure 5-16.If,holding the supply curve fixed,there were an increase in demand that caused the equilibrium price to increase from $6 to $8,then sellers' total revenue would

Accepted Answer

A)  increase. 
B)  decrease. 
C)  remain unchanged. 
D)  The effect on total revenue cannot be determined from the given information. 
A)  increase. 
B)  decrease. 
C)  remain unchanged. 
D)  The effect on total revenue cannot be determined from the given information.

Question 6

Figure 5-5  
-Refer to Figure 5-5.At a price of $48 per unit,sellers' total revenue equals

Accepted Answer

A)  $150. 
B)  $200. 
C)  $288. 
D)  $364. 
A)  $150. 
B)  $200. 
C)  $288. 
D)  $364.

Question 7

Last year,Olivia bought 6 pairs of shoes when her income was $50,000.This year,her income is $55,000,and she purchased 8 pairs of shoes.Holding other factors constant and using the midpoint method,it follows that Olivia's income elasticity of demand is about

Accepted Answer

A)  0.33,and Olivia regards shoes as an inferior good. 
B)  0.33,and Olivia regards shoes as a normal good. 
C)  3.00,and Olivia regards shoes as an inferior good. 
D)  3.00,and Olivia regards shoes as a normal good. 
A)  0.33,and Olivia regards shoes as an inferior good. 
B)  0.33,and Olivia regards shoes as a normal good. 
C)  3.00,and Olivia regards shoes as an inferior good. 
D)  3.00,and Olivia regards shoes as a normal good.

Question 8

Demand is said to be inelastic if the

Accepted Answer

A)  quantity demanded changes proportionately more than price. 
B)  price changes proportionately more than income. 
C)  quantity demanded changes proportionately less than price. 
D)  quantity demanded changes proportionately the same as price. 
A)  quantity demanded changes proportionately more than price. 
B)  price changes proportionately more than income. 
C)  quantity demanded changes proportionately less than price. 
D)  quantity demanded changes proportionately the same as price.

Question 9

If the price elasticity of supply is 2 and the quantity supplied decreases by 6%,then the price must have decreased by 3%.

Accepted Answer

A) True 
 B)False

Question 10

Whether a good is a luxury or necessity depends on the

Accepted Answer

A)  price of the good. 
B)  preferences of the buyer. 
C)  intrinsic properties of the good. 
D)  scarcity of the good. 
A)  price of the good. 
B)  preferences of the buyer. 
C)  intrinsic properties of the good. 
D)  scarcity of the good.

Question 11

Suppose that when the price of ginger ale is $2 per bottle,firms can sell 4 million bottles.When the price of ginger ale is $3 per bottle,firms can sell 2 million bottles.Which of the following statements is true?

Accepted Answer

A)  The demand for ginger ale is income inelastic,so an increase in the price of ginger ale will increase the total revenue of ginger ale producers. 
B)  The demand for ginger ale is income elastic,so an increase in the price of ginger ale will increase the total revenue of ginger ale producers. 
C)  The demand for ginger ale is price inelastic,so an increase in the price of ginger ale will increase the total revenue of ginger ale producers. 
D)  The demand for ginger ale is price elastic,so an increase in the price of ginger ale will decrease the total revenue of ginger ale producers. 
A)  The demand for ginger ale is income inelastic,so an increase in the price of ginger ale will increase the total revenue of ginger ale producers. 
B)  The demand for ginger ale is income elastic,so an increase in the price of ginger ale will increase the total revenue of ginger ale producers. 
C)  The demand for ginger ale is price inelastic,so an increase in the price of ginger ale will increase the total revenue of ginger ale producers. 
D)  The demand for ginger ale is price elastic,so an increase in the price of ginger ale will decrease the total revenue of ginger ale producers.

Question 12

Figure 5-13  
-Refer to Figure 5-13.Over which range is the supply curve in this figure the most elastic?

Accepted Answer

A)  $16 to $40 
B)  $40 to $100 
C)  $100 to $220 
D)  $220 to $430 
A)  $16 to $40 
B)  $40 to $100 
C)  $100 to $220 
D)  $220 to $430

Question 13

Demand is inelastic if the price elasticity of demand is greater than 1.

Accepted Answer

A) True 
 B)False

Question 14

If the price elasticity of demand for a good is 10.0,then a 4 percent increase in price results in a

Accepted Answer

A)  0.4 percent decrease in the quantity demanded. 
B)  2.5 percent decrease in the quantity demanded. 
C)  4 percent decrease in the quantity demanded. 
D)  40 percent decrease in the quantity demanded. 
A)  0.4 percent decrease in the quantity demanded. 
B)  2.5 percent decrease in the quantity demanded. 
C)  4 percent decrease in the quantity demanded. 
D)  40 percent decrease in the quantity demanded.

Question 15

If the price elasticity of demand for a good is 0.4,then a 10 percent increase in price results in a

Accepted Answer

A)  0.4 percent decrease in the quantity demanded. 
B)  2.5 percent decrease in the quantity demanded. 
C)  4 percent decrease in the quantity demanded. 
D)  40 percent decrease in the quantity demanded. 
A)  0.4 percent decrease in the quantity demanded. 
B)  2.5 percent decrease in the quantity demanded. 
C)  4 percent decrease in the quantity demanded. 
D)  40 percent decrease in the quantity demanded.

Question 16

Figure 5-1  
-Refer to Figure 5-1.Between point A and point B,price elasticity of demand is equal to

Accepted Answer

A)  0.33. 
B)  0.67. 
C)  1.5 
D)  2.67. 
A)  0.33. 
B)  0.67. 
C)  1.5 
D)  2.67.

Question 17

If the demand for textbooks is inelastic,then an increase in the price of textbooks will

Accepted Answer

A)  increase total revenue of textbook sellers. 
B)  decrease total revenue of textbook sellers. 
C)  not change total revenue of textbook sellers. 
D)  There is not enough information to answer this question. 
A)  increase total revenue of textbook sellers. 
B)  decrease total revenue of textbook sellers. 
C)  not change total revenue of textbook sellers. 
D)  There is not enough information to answer this question.

Question 18

Suppose demand is given by the equation:   Using the midpoint method,what is the price elasticity of demand between $2 and $4?

Accepted Answer

The price

Question 19

Which of the following is likely to have the most price inelastic demand?

Accepted Answer

A)  camcorders 
B)  insulin 
C)  apples 
D)  devices that remove cores from apples 
A)  camcorders 
B)  insulin 
C)  apples 
D)  devices that remove cores from apples

Question 20

Even the demand for a necessity such as gasoline will respond to a change in price,especially over a longer time horizon.

Accepted Answer

A) True 
 B)False

Exam 5: Elasticity and Its Application

If the price elasticity of supply is 0.2,and a price increase led to a 3% increase in quantity supplied,then the price increase is about

Table 5-6 -Refer to Table 5-6.Which scenario describes the market for oil in the short run in comparison to the long run?

Figure 5-4 -Refer to Figure 5-4.If the price decreases in the region of the demand curve between points A and B,we can expect total revenue to

Get Smart University is contemplating an increase in tuition to enhance revenue.If GSU feels that raising tuition would enhance revenue,it is

Figure 5-16 -Refer to Figure 5-16.If,holding the supply curve fixed,there were an increase in demand that caused the equilibrium price to increase from $6 to $8,then sellers' total revenue would

Figure 5-5 -Refer to Figure 5-5.At a price of $48 per unit,sellers' total revenue equals

Last year,Olivia bought 6 pairs of shoes when her income was $50,000.This year,her income is $55,000,and she purchased 8 pairs of shoes.Holding other factors constant and using the midpoint method,it follows that Olivia's income elasticity of demand is about

Demand is said to be inelastic if the

If the price elasticity of supply is 2 and the quantity supplied decreases by 6%,then the price must have decreased by 3%.

Whether a good is a luxury or necessity depends on the

Suppose that when the price of ginger ale is $2 per bottle,firms can sell 4 million bottles.When the price of ginger ale is $3 per bottle,firms can sell 2 million bottles.Which of the following statements is true?

Figure 5-13 -Refer to Figure 5-13.Over which range is the supply curve in this figure the most elastic?

Demand is inelastic if the price elasticity of demand is greater than 1.

If the price elasticity of demand for a good is 10.0,then a 4 percent increase in price results in a

If the price elasticity of demand for a good is 0.4,then a 10 percent increase in price results in a

Figure 5-1 -Refer to Figure 5-1.Between point A and point B,price elasticity of demand is equal to

If the demand for textbooks is inelastic,then an increase in the price of textbooks will

Suppose demand is given by the equation: Using the midpoint method,what is the price elasticity of demand between $2 and $4?

Which of the following is likely to have the most price inelastic demand?

Even the demand for a necessity such as gasoline will respond to a change in price,especially over a longer time horizon.

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

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