Question 1

If the price elasticity of supply for a good is equal to infinity,then the

Accepted Answer

A)  supply curve is vertical. 
B)  supply curve is horizontal. 
C)  supply curve also has a slope equal to infinity. 
D)  quantity supplied is constant regardless of the price. 
A)  supply curve is vertical. 
B)  supply curve is horizontal. 
C)  supply curve also has a slope equal to infinity. 
D)  quantity supplied is constant regardless of the price.

Question 2

For a particular good,a 12 percent increase in price causes a 3 percent decrease in quantity demanded.Which of the following statements is most likely applicable to this good?

Accepted Answer

A)  There are many substitutes for this good. 
B)  The good is a necessity. 
C)  The market for the good is narrowly defined. 
D)  The relevant time horizon is long. 
A)  There are many substitutes for this good. 
B)  The good is a necessity. 
C)  The market for the good is narrowly defined. 
D)  The relevant time horizon is long.

Question 3

Using the midpoint method,compute the elasticity of demand between points A and B.Is demand along this portion of the curve elastic or inelastic? Interpret your answer with regard to price and quantity demanded.Now compute the elasticity of demand between points B and C.Is demand along this portion of the curve elastic or inelastic?

Accepted Answer

In the section of the demand curve from

Question 4

The flatter the demand curve that passes through a given point,the more inelastic the demand.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A)  0 
B)  0.2 
C)  1 
D)  2.1 
A)  0 
B)  0.2 
C)  1 
D)  2.1

Question 6

When the price of knee braces increased by 25 percent,the Brace Yourself Company increased its quantity supplied of knee braces per week by 75 percent.BYC's price elasticity of supply of knee braces is 0.33.

Accepted Answer

A) True 
 B)False

Question 7

Figure 5-5  
-Refer to Figure 5-5.Using the midpoint method,between prices of $30 and $36,price elasticity of demand is about

Accepted Answer

A)  0.5. 
B)  0.82. 
C)  1.22. 
D)  2. 
A)  0.5. 
B)  0.82. 
C)  1.22. 
D)  2.

Question 8

Figure 5-4  
-Refer to Figure 5-4.If the price increases 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 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 9

Figure 5-10  
-Refer to Figure 5-10.When the price is $30,total revenue is

Accepted Answer

A)  $3,000. 
B)  $5,000. 
C)  $7,000. 
D)  $9,000. 
A)  $3,000. 
B)  $5,000. 
C)  $7,000. 
D)  $9,000.

Question 10

Pierre says that he will spend exactly 75 cents a day on candy bars,regardless of the price of candy bars.Pierre's demand for candy bars is

Accepted Answer

A)  perfectly elastic. 
B)  unit elastic. 
C)  perfectly inelastic. 
D)  None of the above answers is correct. 
A)  perfectly elastic. 
B)  unit elastic. 
C)  perfectly inelastic. 
D)  None of the above answers is correct.

Question 11

Cross-price elasticity is used to determine whether goods are substitutes or complements.

Accepted Answer

A) True 
 B)False

Question 12

On a certain supply curve,one point is (quantity supplied = 200,price = $4.00)and another point is (quantity supplied = 250,price = $4.50).Using the midpoint method,the price elasticity of supply is about

Accepted Answer

A)  0.22. 
B)  0.53. 
C)  1.00. 
D)  1.89. 
A)  0.22. 
B)  0.53. 
C)  1.00. 
D)  1.89.

Question 13

Drug interdiction,which reduces the supply of drugs,may decrease drug-related crime because the demand for drugs is inelastic.

Accepted Answer

A) True 
 B)False

Question 14

Suppose demand is given by the equation:   At what price will total revenue be maximized?

Accepted Answer

Total revenue will be maximize

Question 15

If we observe that when consumers' incomes rise by 10%,the quantity demanded of ice cream increases by 5%,then ice cream is an inferior good.

Accepted Answer

A) True 
 B)False

Question 16

The demand for soap is more elastic than the demand for Dove soap.

Accepted Answer

A) True 
 B)False

Question 17

Figure 5-15  
-Refer to Figure 5-15.Using the midpoint method,what is the price elasticity of supply between $6 and $8?

Accepted Answer

A)  0.86 
B)  1.00 
C)  1.17 
D)  1.25 
A)  0.86 
B)  1.00 
C)  1.17 
D)  1.25

Question 18

Which of the following is not a determinant of the price elasticity of demand for a good?

Accepted Answer

A)  the time horizon 
B)  the steepness or flatness of the supply curve for the good 
C)  the definition of the market for the good 
D)  the availability of substitutes for the good 
A)  the time horizon 
B)  the steepness or flatness of the supply curve for the good 
C)  the definition of the market for the good 
D)  the availability of substitutes for the good

Question 19

Given the market for illegal drugs,when the government is successful in reducing the flow of drugs into the United States,

Accepted Answer

A)  supply decreases,demand is unaffected,and price increases. 
B)  demand decreases,supply is unaffected,and price decreases. 
C)  demand and supply both decrease,leaving price essentially unchanged. 
D)  supply decreases,demand increases,and price increases substantially. 
A)  supply decreases,demand is unaffected,and price increases. 
B)  demand decreases,supply is unaffected,and price decreases. 
C)  demand and supply both decrease,leaving price essentially unchanged. 
D)  supply decreases,demand increases,and price increases substantially.

Question 20

If the price elasticity of demand for a good is 6,then a 3 percent decrease in price results in

Accepted Answer

A)  a 20 percent increase in the quantity demanded. 
B)  an 18 percent increase in the quantity demanded. 
C)  a 2 percent increase in the quantity demanded. 
D)  a 1.8 percent increase in the quantity demanded. 
A)  a 20 percent increase in the quantity demanded. 
B)  an 18 percent increase in the quantity demanded. 
C)  a 2 percent increase in the quantity demanded. 
D)  a 1.8 percent increase in the quantity demanded.

Exam 5: Elasticity and Its Application

If the price elasticity of supply for a good is equal to infinity,then the

For a particular good,a 12 percent increase in price causes a 3 percent decrease in quantity demanded.Which of the following statements is most likely applicable to this good?

The flatter the demand curve that passes through a given point,the more inelastic the demand.

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

When the price of knee braces increased by 25 percent,the Brace Yourself Company increased its quantity supplied of knee braces per week by 75 percent.BYC's price elasticity of supply of knee braces is 0.33.

Figure 5-5 -Refer to Figure 5-5.Using the midpoint method,between prices of $30 and $36,price elasticity of demand is about

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

Figure 5-10 -Refer to Figure 5-10.When the price is $30,total revenue is

Pierre says that he will spend exactly 75 cents a day on candy bars,regardless of the price of candy bars.Pierre's demand for candy bars is

Cross-price elasticity is used to determine whether goods are substitutes or complements.

On a certain supply curve,one point is (quantity supplied = 200,price = $4.00)and another point is (quantity supplied = 250,price = $4.50).Using the midpoint method,the price elasticity of supply is about

Drug interdiction,which reduces the supply of drugs,may decrease drug-related crime because the demand for drugs is inelastic.

Suppose demand is given by the equation: At what price will total revenue be maximized?

If we observe that when consumers' incomes rise by 10%,the quantity demanded of ice cream increases by 5%,then ice cream is an inferior good.

The demand for soap is more elastic than the demand for Dove soap.

Figure 5-15 -Refer to Figure 5-15.Using the midpoint method,what is the price elasticity of supply between $6 and $8?

Which of the following is not a determinant of the price elasticity of demand for a good?

Given the market for illegal drugs,when the government is successful in reducing the flow of drugs into the United States,

If the price elasticity of demand for a good is 6,then a 3 percent decrease in price results in

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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