Question 1

Figure 5-20  
-Refer to Figure 5-20. Which supply curve is most likely relevant over a very long period of time?

Accepted Answer

A) S1 
B) S2 
C) S3 
D) All of the above are equally likely to be relevant over a very long period of time. 
A) S1 
B) S2 
C) S3 
D) All of the above are equally likely to be relevant over a very long period of time. C

Question 2

Suppose that when the price of good X falls from $10 to $8, the quantity demanded of good Y rises from 20 units to 25 units. Using the midpoint method, the cross-price elasticity of demand is

Accepted Answer

A) -1.0, and X and Y are complements. 
B) -1.0, and X and Y are substitutes. 
C) 1.0, and X and Y are complements. 
D) 1.0, and X and Y are substitutes. 
A) -1.0, and X and Y are complements. 
B) -1.0, and X and Y are substitutes. 
C) 1.0, and X and Y are complements. 
D) 1.0, and X and Y are substitutes. A

Question 3

A key determinant of the price elasticity of supply is the

Accepted Answer

A) number of close substitutes for the good in question. 
B) extent to which buyers alter their quantities demanded in response to changes in prices. 
C) length of the time period. 
D) extent to which buyers alter their quantities demanded in response to changes in their incomes. 
A) number of close substitutes for the good in question. 
B) extent to which buyers alter their quantities demanded in response to changes in prices. 
C) length of the time period. 
D) extent to which buyers alter their quantities demanded in response to changes in their incomes. C

Question 4

As we move downward and to the right along a linear, downward-sloping demand curve,

Accepted Answer

A) both slope and elasticity remain constant. 
B) slope changes but elasticity remains constant. 
C) both slope and elasticity change. 
D) slope remains constant but elasticity changes. 
A) both slope and elasticity remain constant. 
B) slope changes but elasticity remains constant. 
C) both slope and elasticity change. 
D) slope remains constant but elasticity changes.

Question 5

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

Accepted Answer

A) A is a luxury and B is a necessity. 
B) A is a good after an increase in income and B is that same good after a decrease in income. 
C) A has fewer substitutes than B. 
D) A is a good immediately after a price increase and B is that same good 3 years after the price increase. 
A) A is a luxury and B is a necessity. 
B) A is a good after an increase in income and B is that same good after a decrease in income. 
C) A has fewer substitutes than B. 
D) A is a good immediately after a price increase and B is that same good 3 years after the price increase.

Question 6

A key determinant of the price elasticity of supply is

Accepted Answer

A) the ability of sellers to change the price of the good they produce. 
B) the ability of sellers to change the amount of the good they produce. 
C) how responsive buyers are to changes in sellers' prices. 
D) the slope of the demand curve. 
A) the ability of sellers to change the price of the good they produce. 
B) the ability of sellers to change the amount of the good they produce. 
C) how responsive buyers are to changes in sellers' prices. 
D) the slope of the demand curve.

Question 7

Which of the following expressions represents a cross-price elasticity of demand?

Accepted Answer

A) percentage change in quantity demanded of bread divided by percentage change in quantity supplied of bread 
B) percentage change in quantity demanded of bread divided by percentage change in price of butter 
C) percentage change in price of bread divided by percentage change in quantity demanded of bread 
D) percentage change in quantity demanded of bread divided by percentage change in income 
A) percentage change in quantity demanded of bread divided by percentage change in quantity supplied of bread 
B) percentage change in quantity demanded of bread divided by percentage change in price of butter 
C) percentage change in price of bread divided by percentage change in quantity demanded of bread 
D) percentage change in quantity demanded of bread divided by percentage change in income

Question 8

Suppose demand is given by the equation:   At what point along this demand curve will total revenue be maximized?

Accepted Answer

Total revenue is con

Question 9

If we observe that when the price of chocolate candy bars increases by 10%, quantity demanded decreases total by 10%, then the demand for chocolate candy bars is unit price elastic.

Accepted Answer

A) True 
 B)False

Question 10

Figure 5-4  
-Refer to Figure 5-4. The section of the demand curve from B to C represents the

Accepted Answer

A) elastic section of the demand curve. 
B) perfectly elastic section of the demand curve. 
C) unit elastic section of the demand curve. 
D) inelastic section of the demand curve. 
A) elastic section of the demand curve. 
B) perfectly elastic section of the demand curve. 
C) unit elastic section of the demand curve. 
D) inelastic section of the demand curve.

Question 11

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 12

When demand is unit elastic, price elasticity of demand equals

Accepted Answer

A) 1, and total revenue and price move in the same direction. 
B) 1, and total revenue and price move in opposite directions. 
C) 1, and total revenue does not change when price changes. 
D) 0, and total revenue does not change when price changes. 
A) 1, and total revenue and price move in the same direction. 
B) 1, and total revenue and price move in opposite directions. 
C) 1, and total revenue does not change when price changes. 
D) 0, and total revenue does not change when price changes.

Question 13

Suppose a market has the demand function Qd=20-0.5P. Using the midpoint method, what is the price elasticity of demand between $30 and $40?

Accepted Answer

Question 14

If the price of calculators increases by 15% and the quantity demanded per week falls by 45% as a result, then the price elasticity of demand is 3.

Accepted Answer

A) True 
 B)False

Question 15

Table 5-6  
-Refer to Table 5-6. As price rises from $10 to $15, the price elasticity of demand using the midpoint method is approximately

Accepted Answer

A) 0.40. 
B) 0.56. 
C) 1.80. 
D) 2.50. 
A) 0.40. 
B) 0.56. 
C) 1.80. 
D) 2.50.

Question 16

-Refer to Table 5-2. Using the midpoint method, if the price falls from $100 to $50, the absolute value of the price elasticity of demand is

Accepted Answer

A) 0.31. 
B) 0.46. 
C) 1.25. 
D) 2.17 
A) 0.31. 
B) 0.46. 
C) 1.25. 
D) 2.17

Question 17

The price elasticity of demand for mobile phones

Accepted Answer

A) will be higher if there is an improvement in the production technology. 
B) will be lower if consumers perceive mobile phones to be a necessity. 
C) is computed as the percentage change in the price of mobile phones divided by the percentage change in quantity of mobile phones. 
D) All of the above are correct. 
A) will be higher if there is an improvement in the production technology. 
B) will be lower if consumers perceive mobile phones to be a necessity. 
C) is computed as the percentage change in the price of mobile phones divided by the percentage change in quantity of mobile phones. 
D) All of the above are correct.

Question 18

Demand for a good is said to be inelastic if the quantity demanded increases slightly when the price falls by a large amount.

Accepted Answer

A) True 
 B)False

Question 19

Goods with close substitutes tend to have more elastic demands than do goods without close substitutes.

Accepted Answer

A) True 
 B)False

Question 20

If the price elasticity of demand is equal to 0, then demand is unit elastic.

Accepted Answer

A) True 
 B)False

Exam 5: Elasticity and Its Application

Figure 5-20 -Refer to Figure 5-20. Which supply curve is most likely relevant over a very long period of time?

Suppose that when the price of good X falls from $10 to $8, the quantity demanded of good Y rises from 20 units to 25 units. Using the midpoint method, the cross-price elasticity of demand is

A key determinant of the price elasticity of supply is the

As we move downward and to the right along a linear, downward-sloping demand curve,

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

A key determinant of the price elasticity of supply is

Which of the following expressions represents a cross-price elasticity of demand?

Suppose demand is given by the equation: At what point along this demand curve will total revenue be maximized?

If we observe that when the price of chocolate candy bars increases by 10%, quantity demanded decreases total by 10%, then the demand for chocolate candy bars is unit price elastic.

Figure 5-4 -Refer to Figure 5-4. The section of the demand curve from B to C represents the

When demand is unit elastic, price elasticity of demand equals

Suppose a market has the demand function Qd=20-0.5P. Using the midpoint method, what is the price elasticity of demand between $30 and $40?

If the price of calculators increases by 15% and the quantity demanded per week falls by 45% as a result, then the price elasticity of demand is 3.

Table 5-6 -Refer to Table 5-6. As price rises from $10 to $15, the price elasticity of demand using the midpoint method is approximately

-Refer to Table 5-2. Using the midpoint method, if the price falls from $100 to $50, the absolute value of the price elasticity of demand is

The price elasticity of demand for mobile phones

Demand for a good is said to be inelastic if the quantity demanded increases slightly when the price falls by a large amount.

Goods with close substitutes tend to have more elastic demands than do goods without close substitutes.

If the price elasticity of demand is equal to 0, then demand is unit elastic.

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 Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Filters

Suppose a market has the demand function Q^d=20-0.5P. Using the midpoint method, what is the price elasticity of demand between $30 and $40?