Question 1

Figure 5-11  
-Refer to Figure 5-11.If the price rises from point D to point C,total revenue

Accepted Answer

A)  increases,and demand is price elastic. 
B)  decreases,and demand is price elastic. 
C)  increases,and demand is price inelastic. 
D)  decreases,and demand is price inelastic. 
A)  increases,and demand is price elastic. 
B)  decreases,and demand is price elastic. 
C)  increases,and demand is price inelastic. 
D)  decreases,and demand is price inelastic.

Question 2

The value of the price elasticity of demand for a good will be relatively large when

Accepted Answer

A)  there are no good substitutes available for the good. 
B)  the time period in question is relatively short. 
C)  the good is a luxury rather than a necessity. 
D)  All of the above are correct. 
A)  there are no good substitutes available for the good. 
B)  the time period in question is relatively short. 
C)  the good is a luxury rather than a necessity. 
D)  All of the above are correct.

Question 3

Demand is said to be price elastic if

Accepted Answer

A)  the price of the good responds substantially to changes in demand. 
B)  demand shifts substantially when income or the expected future price of the good changes. 
C)  buyers do not respond much to changes in the price of the good. 
D)  buyers respond substantially to changes in the price of the good. 
A)  the price of the good responds substantially to changes in demand. 
B)  demand shifts substantially when income or the expected future price of the good changes. 
C)  buyers do not respond much to changes in the price of the good. 
D)  buyers respond substantially to changes in the price of the good.

Question 4

The case of perfectly elastic demand is illustrated by a demand curve that is

Accepted Answer

A)  vertical. 
B)  horizontal. 
C)  downward-sloping but relatively steep. 
D)  downward-sloping but relatively flat. 
A)  vertical. 
B)  horizontal. 
C)  downward-sloping but relatively steep. 
D)  downward-sloping but relatively flat.

Question 5

If the price elasticity of supply is 1.2,and price increased by 5%,quantity supplied would

Accepted Answer

A)  increase by 4.2%. 
B)  increase by 6%. 
C)  decrease by 4.2%. 
D)  decrease by 6%. 
A)  increase by 4.2%. 
B)  increase by 6%. 
C)  decrease by 4.2%. 
D)  decrease by 6%.

Question 6

How did the farm population in the United States change between 1950 and today?

Accepted Answer

A)  It dropped from 10 million to fewer than 3 million people. 
B)  It dropped from 20 million to fewer than 5 million people. 
C)  It dropped from 30 million to just over 6 million people. 
D)  It increased from 10 million to almost 13 million people. 
A)  It dropped from 10 million to fewer than 3 million people. 
B)  It dropped from 20 million to fewer than 5 million people. 
C)  It dropped from 30 million to just over 6 million people. 
D)  It increased from 10 million to almost 13 million people.

Question 7

The discovery of a new hybrid wheat would increase the supply of wheat.As a result,wheat farmers would realize an increase in total revenue if the

Accepted Answer

A)  supply of wheat is elastic. 
B)  supply of wheat is inelastic. 
C)  demand for wheat is inelastic. 
D)  demand for wheat is elastic. 
A)  supply of wheat is elastic. 
B)  supply of wheat is inelastic. 
C)  demand for wheat is inelastic. 
D)  demand for wheat is elastic.

Question 8

If the price of natural gas rises,when is the price elasticity of demand likely to be the highest?

Accepted Answer

A)  immediately after the price increase 
B)  one month after the price increase 
C)  three months after the price increase 
D)  one year after the price increase 
A)  immediately after the price increase 
B)  one month after the price increase 
C)  three months after the price increase 
D)  one year after the price increase

Question 9

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

Accepted Answer

A)  0.58 
B)  0.71 
C)  1.06 
D)  1.4 
A)  0.58 
B)  0.71 
C)  1.06 
D)  1.4

Question 10

If a 40% change in price results in a 25% change in quantity supplied,then the price elasticity of supply is about

Accepted Answer

A)  0.63,and supply is elastic. 
B)  0.63,and supply is inelastic. 
C)  1.60,and supply is elastic. 
D)  1.60,and supply is inelastic. 
A)  0.63,and supply is elastic. 
B)  0.63,and supply is inelastic. 
C)  1.60,and supply is elastic. 
D)  1.60,and supply is inelastic.

Question 11

Figure 5-3  
-Refer to Figure 5-3.Using the midpoint method,what is the price elasticity of supply between $15 and $25?

Accepted Answer

The price

Question 12

An increase in the price of cheese crackers from $2.25 to $2.45 per box causes suppliers of cheese crackers to increase their quantity supplied from 125 boxes per minute to 145 boxes per minute.Using the midpoint method,supply is

Accepted Answer

A)  elastic,and the price elasticity of supply is 1.74. 
B)  elastic,and the price elasticity of supply is 0.57. 
C)  inelastic,and the price elasticity of supply is 1.74. 
D)  inelastic,and the price elasticity of supply is 0.57. 
A)  elastic,and the price elasticity of supply is 1.74. 
B)  elastic,and the price elasticity of supply is 0.57. 
C)  inelastic,and the price elasticity of supply is 1.74. 
D)  inelastic,and the price elasticity of supply is 0.57.

Question 13

Price elasticity of demand along a linear,downward-sloping demand curve increases as price falls.

Accepted Answer

A) True 
 B)False

Question 14

If the price elasticity of demand for a good is 1,then a 3 percent decrease in price results in a

Accepted Answer

A)  0.1 percent increase in the quantity demanded. 
B)  1 percent increase in the quantity demanded. 
C)  3 percent increase in the quantity demanded. 
D)  4 percent increase in the quantity demanded. 
A)  0.1 percent increase in the quantity demanded. 
B)  1 percent increase in the quantity demanded. 
C)  3 percent increase in the quantity demanded. 
D)  4 percent increase in the quantity demanded.

Question 15

If the cross-price elasticity of demand between two goods is negative,are the goods complements or substitutes?

Accepted Answer

The goods

Question 16

The federal government is concerned about obesity in the United States.Congress is considering two plans.One will ban the production and sale of "junk food." The other will increase nutrition-education programs and include substantial advertising campaigns to encourage healthy eating habits.The junk-food ban program

Accepted Answer

A)  and the education program will reduce the quantity of junk food sold and raise the price. 
B)  and the education program will reduce the quantity of junk food sold and lower the price. 
C)  will reduce the quantity of junk food sold and raise the price.The education program will reduce the quantity of junk food sold and lower the price. 
D)  will reduce the quantity of junk food sold and lower the price.The education program will reduce the quantity of junk food sold and raise the price. 
A)  and the education program will reduce the quantity of junk food sold and raise the price. 
B)  and the education program will reduce the quantity of junk food sold and lower the price. 
C)  will reduce the quantity of junk food sold and raise the price.The education program will reduce the quantity of junk food sold and lower the price. 
D)  will reduce the quantity of junk food sold and lower the price.The education program will reduce the quantity of junk food sold and raise the price.

Question 17

Figure 5-6  
-Refer to Figure 5-6.If the price decreased from $18 to $6,total revenue would

Accepted Answer

A)  increase by $1,200,and demand is elastic between points A and C. 
B)  increase by $800,and demand is elastic between points A and C. 
C)  decrease by $1,200,and demand is inelastic between points A and C. 
D)  decrease by $800,and demand is inelastic between points A and C. 
A)  increase by $1,200,and demand is elastic between points A and C. 
B)  increase by $800,and demand is elastic between points A and C. 
C)  decrease by $1,200,and demand is inelastic between points A and C. 
D)  decrease by $800,and demand is inelastic between points A and C.

Question 18

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

Accepted Answer

A)  white chocolate chip with macadamia nut cookies 
B)  hardback novels 
C)  salt 
D)  box seats at a major league baseball game 
A)  white chocolate chip with macadamia nut cookies 
B)  hardback novels 
C)  salt 
D)  box seats at a major league baseball game

Question 19

When demand is elastic,an increase in price will cause

Accepted Answer

A)  an increase in total revenue. 
B)  a decrease in total revenue. 
C)  no change in total revenue but an increase in quantity demanded. 
D)  no change in total revenue but a decrease in quantity demanded. 
A)  an increase in total revenue. 
B)  a decrease in total revenue. 
C)  no change in total revenue but an increase in quantity demanded. 
D)  no change in total revenue but a decrease in quantity demanded.

Question 20

If a firm is facing elastic demand,then the firm should decrease price to increase revenue.

Accepted Answer

A) True 
 B)False

Exam 5: Elasticity and Its Application

Figure 5-11 -Refer to Figure 5-11.If the price rises from point D to point C,total revenue

The value of the price elasticity of demand for a good will be relatively large when

Demand is said to be price elastic if

The case of perfectly elastic demand is illustrated by a demand curve that is

If the price elasticity of supply is 1.2,and price increased by 5%,quantity supplied would

How did the farm population in the United States change between 1950 and today?

The discovery of a new hybrid wheat would increase the supply of wheat.As a result,wheat farmers would realize an increase in total revenue if the

If the price of natural gas rises,when is the price elasticity of demand likely to be the highest?

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

If a 40% change in price results in a 25% change in quantity supplied,then the price elasticity of supply is about

Figure 5-3 -Refer to Figure 5-3.Using the midpoint method,what is the price elasticity of supply between $15 and $25?

An increase in the price of cheese crackers from $2.25 to $2.45 per box causes suppliers of cheese crackers to increase their quantity supplied from 125 boxes per minute to 145 boxes per minute.Using the midpoint method,supply is

Price elasticity of demand along a linear,downward-sloping demand curve increases as price falls.

If the price elasticity of demand for a good is 1,then a 3 percent decrease in price results in a

If the cross-price elasticity of demand between two goods is negative,are the goods complements or substitutes?

Figure 5-6 -Refer to Figure 5-6.If the price decreased from $18 to $6,total revenue would

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

When demand is elastic,an increase in price will cause

If a firm is facing elastic demand,then the firm should decrease price to increase revenue.

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