Question 1

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

Accepted Answer

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

Question 2

Table 5-1
  
-Refer to Table 5-1.Which of the following is consistent with the elasticities given in Table 5-2?

Accepted Answer

A)  A is grapes,and B is fruit. 
B)  A is T-shirts,and B is socks. 
C)  A is train tickets before cars were invented,and B is train tickets after cars were invented. 
D)  A is diamond necklaces,and B is beds. 
A)  A is grapes,and B is fruit. 
B)  A is T-shirts,and B is socks. 
C)  A is train tickets before cars were invented,and B is train tickets after cars were invented. 
D)  A is diamond necklaces,and B is beds.

Question 3

The price elasticity of supply measures how responsive

Accepted Answer

A)  equilibrium price is to equilibrium quantity. 
B)  sellers are to a change in buyers' income. 
C)  sellers are to a change in price. 
D)  consumers are to the number of substitutes. 
A)  equilibrium price is to equilibrium quantity. 
B)  sellers are to a change in buyers' income. 
C)  sellers are to a change in price. 
D)  consumers are to the number of substitutes.

Question 4

Table 5-3
The following table shows the demand schedule for a particular good.
  
-Refer to Table 5-3.Using the midpoint method,when price falls from $6 to $3,the price elasticity of demand is

Accepted Answer

A)  0.43 
B)  0.67 
C)  1.50 
D)  2.33 
A)  0.43 
B)  0.67 
C)  1.50 
D)  2.33

Question 5

Table 5-5
  
-Refer to Table 5-5.Which of the three supply curves represents the most elastic supply?

Accepted Answer

A)  supply curve A 
B)  supply curve B 
C)  supply curve C 
D)  There is no difference in the elasticity of the three supply curves. 
A)  supply curve A 
B)  supply curve B 
C)  supply curve C 
D)  There is no difference in the elasticity of the three supply curves.

Question 6

The income elasticity of demand for caviar tends to be

Accepted Answer

A)  high because caviar is relatively expensive. 
B)  low because caviar is packaged in small containers. 
C)  high because buyers generally feel that they can do without it. 
D)  low because it is almost always in short supply. 
A)  high because caviar is relatively expensive. 
B)  low because caviar is packaged in small containers. 
C)  high because buyers generally feel that they can do without it. 
D)  low because it is almost always in short supply.

Question 7

Suppose a freeze in Florida significantly reduces the supply of oranges this year.As a result,would you expect the total revenue from the sale of orange juice to rise or fall? Explain.

Accepted Answer

Since oranges are an input into the prod

Question 8

If the cross-price elasticity of two goods is negative,then the two goods are

Accepted Answer

A)  necessities. 
B)  complements. 
C)  normal goods. 
D)  inferior goods. 
A)  necessities. 
B)  complements. 
C)  normal goods. 
D)  inferior goods.

Question 9

At price of $1.30 per pound,a local apple orchard is willing to supply 150 pounds of apples per day.At a price of $1.50 per pound,the orchard is willing to supply 170 pounds of apples per day.Using the midpoint method,the price elasticity of supply is about

Accepted Answer

A)  1.14. 
B)  1.00. 
C)  0.875. 
D)  0.50. 
A)  1.14. 
B)  1.00. 
C)  0.875. 
D)  0.50.

Question 10

For which of the following types of goods would the income elasticity of demand be positive and relatively large?

Accepted Answer

A)  all inferior goods 
B)  all normal goods 
C)  goods for which there are many complements 
D)  luxuries 
A)  all inferior goods 
B)  all normal goods 
C)  goods for which there are many complements 
D)  luxuries

Question 11

When the local used bookstore prices economics books at $15 each,it generally sells 70 books per month.If it lowers the price to $7,sales increase to 90 books per month.Given this information,we know that the price elasticity of demand for economics books is about

Accepted Answer

A)  2.91,and an increase in price from $7 to $15 results in an increase in total revenue. 
B)  2.91,and an increase in price from $7 to $15 results in a decrease in total revenue. 
C)  0.34,and an increase in price from $7 to $15 results in an increase in total revenue. 
D)  0.34,and an increase in price from $7 to $15 results in a decrease in total revenue. 
A)  2.91,and an increase in price from $7 to $15 results in an increase in total revenue. 
B)  2.91,and an increase in price from $7 to $15 results in a decrease in total revenue. 
C)  0.34,and an increase in price from $7 to $15 results in an increase in total revenue. 
D)  0.34,and an increase in price from $7 to $15 results in a decrease in total revenue.

Question 12

If the demand for textbooks is inelastic,then a decrease 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 13

For a particular good,a 10 percent increase in price causes a 15 percent decrease in quantity demanded.Which of the following statements is most likely applicable to this good?

Accepted Answer

A)  There are no close substitutes for this good. 
B)  The good is a necessity. 
C)  The market for the good is broadly defined. 
D)  The relevant time horizon is long. 
A)  There are no close substitutes for this good. 
B)  The good is a necessity. 
C)  The market for the good is broadly defined. 
D)  The relevant time horizon is long.

Question 14

If the price elasticity of demand for a good is 0.8,then which of the following events is consistent with a 4 percent decrease in the quantity of the good demanded?

Accepted Answer

A)  a 0.2 percent increase in the price of the good 
B)  a 3.2 percent increase in the price of the good 
C)  a 4.8 percent increase in the price of the good 
D)  a 5 percent increase in the price of the good 
A)  a 0.2 percent increase in the price of the good 
B)  a 3.2 percent increase in the price of the good 
C)  a 4.8 percent increase in the price of the good 
D)  a 5 percent increase in the price of the good

Question 15

A bakery would be willing to supply 500 bagels per day at a price of $0.50 each.At a price of $0.80,the bakery would be willing to supply 1,100 bagels.Using the midpoint method,the price elasticity of supply for bagels is about

Accepted Answer

A)  0.62. 
B)  0.77. 
C)  1.24. 
D)  1.63. 
A)  0.62. 
B)  0.77. 
C)  1.24. 
D)  1.63.

Question 16

Figure 5-6  
-Refer to Figure 5-6.Sellers' total revenue would increase if the price

Accepted Answer

A)  increased from $4 to $6. 
B)  increased from $16 to $18. 
C)  decreased from $8 to $6. 
D)  All of the above are correct. 
A)  increased from $4 to $6. 
B)  increased from $16 to $18. 
C)  decreased from $8 to $6. 
D)  All of the above are correct.

Question 17

Which of the following statements is valid when the market supply curve is vertical?

Accepted Answer

A)  Market quantity supplied does not change when the price changes. 
B)  Supply is perfectly elastic. 
C)  An increase in market demand will increase the equilibrium quantity. 
D)  An increase in market demand will not increase the equilibrium price. 
A)  Market quantity supplied does not change when the price changes. 
B)  Supply is perfectly elastic. 
C)  An increase in market demand will increase the equilibrium quantity. 
D)  An increase in market demand will not increase the equilibrium price.

Question 18

The demand for Rice Krispies is more elastic than the demand for cereal in general.

Accepted Answer

A) True 
 B)False

Question 19

Assume that a 4 percent increase in income results in a 2 percent increase in the quantity demanded of a good.The income elasticity of demand for the good is

Accepted Answer

A)  negative,and the good is an inferior good. 
B)  negative,and the good is a normal good. 
C)  positive,and the good is a normal good. 
D)  positive,and the good is an inferior good. 
A)  negative,and the good is an inferior good. 
B)  negative,and the good is a normal good. 
C)  positive,and the good is a normal good. 
D)  positive,and the good is an inferior good.

Question 20

Figure 5-16  
-Refer to Figure 5-16.Using the midpoint method,what is the price elasticity of supply between point B and point C?

Accepted Answer

A)  1.44 
B)  1.29 
C)  0.96 
D)  0.78 
A)  1.44 
B)  1.29 
C)  0.96 
D)  0.78

Exam 5: Elasticity and Its Application

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

Table 5-1 -Refer to Table 5-1.Which of the following is consistent with the elasticities given in Table 5-2?

The price elasticity of supply measures how responsive

Table 5-3 The following table shows the demand schedule for a particular good. -Refer to Table 5-3.Using the midpoint method,when price falls from $6 to $3,the price elasticity of demand is

Table 5-5 -Refer to Table 5-5.Which of the three supply curves represents the most elastic supply?

The income elasticity of demand for caviar tends to be

Suppose a freeze in Florida significantly reduces the supply of oranges this year.As a result,would you expect the total revenue from the sale of orange juice to rise or fall? Explain.

If the cross-price elasticity of two goods is negative,then the two goods are

At price of $1.30 per pound,a local apple orchard is willing to supply 150 pounds of apples per day.At a price of $1.50 per pound,the orchard is willing to supply 170 pounds of apples per day.Using the midpoint method,the price elasticity of supply is about

For which of the following types of goods would the income elasticity of demand be positive and relatively large?

When the local used bookstore prices economics books at $15 each,it generally sells 70 books per month.If it lowers the price to $7,sales increase to 90 books per month.Given this information,we know that the price elasticity of demand for economics books is about

If the demand for textbooks is inelastic,then a decrease in the price of textbooks will

For a particular good,a 10 percent increase in price causes a 15 percent decrease in quantity demanded.Which of the following statements is most likely applicable to this good?

If the price elasticity of demand for a good is 0.8,then which of the following events is consistent with a 4 percent decrease in the quantity of the good demanded?

A bakery would be willing to supply 500 bagels per day at a price of $0.50 each.At a price of $0.80,the bakery would be willing to supply 1,100 bagels.Using the midpoint method,the price elasticity of supply for bagels is about

Figure 5-6 -Refer to Figure 5-6.Sellers' total revenue would increase if the price

Which of the following statements is valid when the market supply curve is vertical?

The demand for Rice Krispies is more elastic than the demand for cereal in general.

Assume that a 4 percent increase in income results in a 2 percent increase in the quantity demanded of a good.The income elasticity of demand for the good is

Figure 5-16 -Refer to Figure 5-16.Using the midpoint method,what is the price elasticity of supply between point B and point C?

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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