Question 1

Ryan says that he would buy one cup of coffee every day regardless of the price.If he is telling the truth,Ryan's

Accepted Answer

A)  demand for coffee is perfectly inelastic. 
B)  price elasticity of demand for coffee is 1. 
C)  income elasticity of demand for coffee is 0. 
D)  None of the above answers is correct. 
A)  demand for coffee is perfectly inelastic. 
B)  price elasticity of demand for coffee is 1. 
C)  income elasticity of demand for coffee is 0. 
D)  None of the above answers is correct.

Question 2

Tyler purchases 5 pounds of hot dogs per month when his monthly income is $2,000 and 4 pounds of hot dogs per month when his monthly income is $2,200.Tyler's income elasticity of demand for hot dogs is

Accepted Answer

A)  2.33,and hot dogs are a normal good. 
B)  -2.33,and hot dogs are an inferior good. 
C)  0.43,and hot dogs are a normal good. 
D)  -0.43,and hot dogs are an inferior good. 
A)  2.33,and hot dogs are a normal good. 
B)  -2.33,and hot dogs are an inferior good. 
C)  0.43,and hot dogs are a normal good. 
D)  -0.43,and hot dogs are an inferior good.

Question 3

Which of the following statements helps to explain why government drug interdiction increases drug-related crime?

Accepted Answer

A)  The direct impact is on buyers,not sellers. 
B)  Successful drug interdiction policies reduce the demand for illegal drugs. 
C)  Drug addicts will have an even greater need for quick cash to support their habits. 
D)  In the short run,both equilibrium quantities and prices will fall in the markets for illegal drugs. 
A)  The direct impact is on buyers,not sellers. 
B)  Successful drug interdiction policies reduce the demand for illegal drugs. 
C)  Drug addicts will have an even greater need for quick cash to support their habits. 
D)  In the short run,both equilibrium quantities and prices will fall in the markets for illegal drugs.

Question 4

If an increase in income results in a decrease in the quantity demanded of a good,then for that good,the

Accepted Answer

A)  cross-price elasticity of demand is negative. 
B)  price elasticity of demand is elastic. 
C)  income elasticity of demand is negative. 
D)  income elasticity of demand is positive. 
A)  cross-price elasticity of demand is negative. 
B)  price elasticity of demand is elastic. 
C)  income elasticity of demand is negative. 
D)  income elasticity of demand is positive.

Question 5

When small changes in price lead to infinite changes in quantity demanded,demand is perfectly

Accepted Answer

A)  elastic,and the demand curve will be horizontal. 
B)  inelastic,and the demand curve will be horizontal. 
C)  elastic,and the demand curve will be vertical. 
D)  inelastic,and the demand curve will be vertical. 
A)  elastic,and the demand curve will be horizontal. 
B)  inelastic,and the demand curve will be horizontal. 
C)  elastic,and the demand curve will be vertical. 
D)  inelastic,and the demand curve will be vertical.

Question 6

Suppose that quantity demand falls by 30% as a result of a 5% increase in price.The price elasticity of demand for this good is

Accepted Answer

A)  inelastic and equal to 6. 
B)  elastic and equal to 6. 
C)  inelastic and equal to 0.17. 
D)  elastic and equal to 0.17. 
A)  inelastic and equal to 6. 
B)  elastic and equal to 6. 
C)  inelastic and equal to 0.17. 
D)  elastic and equal to 0.17.

Question 7

A discovery that increases wheat yields per acre helps farmers by increasing both supply and total revenues.

Accepted Answer

A) True 
 B)False

Question 8

Holding all other factors constant and using the midpoint method,if a calculator manufacturer increases production from 40 to 50 units when price increases by 20 percent,then supply is

Accepted Answer

A)  inelastic,since the price elasticity of supply is equal to .91. 
B)  inelastic,since the price elasticity of supply is equal to 1.1. 
C)  elastic,since the price elasticity of supply is equal to 0.91. 
D)  elastic,since the price elasticity of supply is equal to 1.1. 
A)  inelastic,since the price elasticity of supply is equal to .91. 
B)  inelastic,since the price elasticity of supply is equal to 1.1. 
C)  elastic,since the price elasticity of supply is equal to 0.91. 
D)  elastic,since the price elasticity of supply is equal to 1.1.

Question 9

Table 5-3
  
-Refer to Table 5-3.Using the midpoint method,what is the price elasticity of demand between $2 and $4?

Accepted Answer

The price

Question 10

Which of the following expressions is valid for the price elasticity of demand?

Accepted Answer

A)  Price elasticity of demand =  
B)  Price elasticity of demand =  
C)  Price elasticity of demand =  
D)  Price elasticity of demand =  
A)  Price elasticity of demand =  
B)  Price elasticity of demand =  
C)  Price elasticity of demand =  
D)  Price elasticity of demand =

Question 11

Demand is said to have unit elasticity if the price elasticity of demand is

Accepted Answer

A)  less than 1. 
B)  greater than 1. 
C)  equal to 1. 
D)  equal to 0. 
A)  less than 1. 
B)  greater than 1. 
C)  equal to 1. 
D)  equal to 0.

Question 12

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 13

Which of the following could be the price elasticity of demand for a good for which an increase in price would decrease revenue?

Accepted Answer

A)  0 
B)  0.5 
C)  1 
D)  1.5 
A)  0 
B)  0.5 
C)  1 
D)  1.5

Question 14

In the market for oil in the short run,demand

Accepted Answer

A)  and supply are both elastic. 
B)  and supply are both inelastic. 
C)  is elastic and supply is inelastic. 
D)  is inelastic and supply is elastic. 
A)  and supply are both elastic. 
B)  and supply are both inelastic. 
C)  is elastic and supply is inelastic. 
D)  is inelastic and supply is elastic.

Question 15

Other things equal,the demand for a good tends to be more inelastic,the

Accepted Answer

A)  fewer the available substitutes. 
B)  longer the time period considered. 
C)  more the good is considered a luxury good. 
D)  more narrowly defined is the market for the good. 
A)  fewer the available substitutes. 
B)  longer the time period considered. 
C)  more the good is considered a luxury good. 
D)  more narrowly defined is the market for the good.

Question 16

If the price elasticity of supply is 1.5,and a price increase led to a 3% increase in quantity supplied,then the price increase is about

Accepted Answer

A)  0.2%. 
B)  0.5%. 
C)  2.0%. 
D)  4.5%. 
A)  0.2%. 
B)  0.5%. 
C)  2.0%. 
D)  4.5%.

Question 17

If soybean farmers know that the demand for soybeans is price inelastic,in order to increase their total revenues they should

Accepted Answer

A)  use more fertilizers and weed killers to increase their yields. 
B)  plant additional acres to increase their output. 
C)  reduce the number of acres they plant to decrease their output. 
D)  Both a and b are correct. 
A)  use more fertilizers and weed killers to increase their yields. 
B)  plant additional acres to increase their output. 
C)  reduce the number of acres they plant to decrease their output. 
D)  Both a and b are correct.

Question 18

Figure 5-13  
-Refer to Figure 5-13.Using the midpoint method,what is the price elasticity of supply between $100 and $220?

Accepted Answer

A)  0.58 
B)  0.67 
C)  1.00 
D)  1.73 
A)  0.58 
B)  0.67 
C)  1.00 
D)  1.73

Question 19

Table 5-4
  
-Refer to Table 5-4.When price is between $10 and $14,demand is

Accepted Answer

A)  elastic. 
B)  unit elastic. 
C)  inelastic. 
D)  There is not enough information given to determine whether demand is elastic,unit elastic,or inelastic. 
A)  elastic. 
B)  unit elastic. 
C)  inelastic. 
D)  There is not enough information given to determine whether demand is elastic,unit elastic,or inelastic.

Question 20

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

Accepted Answer

A)  mint-flavored toothpaste 
B)  toothpaste 
C)  Colgate mint-flavored toothpaste 
D)  a generic mint-flavored toothpaste 
A)  mint-flavored toothpaste 
B)  toothpaste 
C)  Colgate mint-flavored toothpaste 
D)  a generic mint-flavored toothpaste

Exam 5: Elasticity and Its Application

Ryan says that he would buy one cup of coffee every day regardless of the price.If he is telling the truth,Ryan's

Tyler purchases 5 pounds of hot dogs per month when his monthly income is $2,000 and 4 pounds of hot dogs per month when his monthly income is $2,200.Tyler's income elasticity of demand for hot dogs is

Which of the following statements helps to explain why government drug interdiction increases drug-related crime?

If an increase in income results in a decrease in the quantity demanded of a good,then for that good,the

When small changes in price lead to infinite changes in quantity demanded,demand is perfectly

Suppose that quantity demand falls by 30% as a result of a 5% increase in price.The price elasticity of demand for this good is

A discovery that increases wheat yields per acre helps farmers by increasing both supply and total revenues.

Holding all other factors constant and using the midpoint method,if a calculator manufacturer increases production from 40 to 50 units when price increases by 20 percent,then supply is

Table 5-3 -Refer to Table 5-3.Using the midpoint method,what is the price elasticity of demand between $2 and $4?

Which of the following expressions is valid for the price elasticity of demand?

Demand is said to have unit elasticity if the price elasticity of demand is

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

Which of the following could be the price elasticity of demand for a good for which an increase in price would decrease revenue?

In the market for oil in the short run,demand

Other things equal,the demand for a good tends to be more inelastic,the

If the price elasticity of supply is 1.5,and a price increase led to a 3% increase in quantity supplied,then the price increase is about

If soybean farmers know that the demand for soybeans is price inelastic,in order to increase their total revenues they should

Figure 5-13 -Refer to Figure 5-13.Using the midpoint method,what is the price elasticity of supply between $100 and $220?

Table 5-4 -Refer to Table 5-4.When price is between $10 and $14,demand is

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

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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