Question 1

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 2

Last year, Jim bought 8 tickets to sporting events when his income was $30,000. This year, his income is $33,000, and he purchased 10 tickets to sporting events. Holding other factors constant and using the midpoint method, it follows that Jim's income elasticity of demand is about

Accepted Answer

A) 0.43, and Jim regards tickets to sporting events as inferior goods. 
B) 0.43, and Jim regards tickets to sporting events as normal goods. 
C) 2.33, and Jim regards tickets to sporting events as inferior goods. 
D) 2.33, and Jim regards tickets to sporting events as normal goods. 
A) 0.43, and Jim regards tickets to sporting events as inferior goods. 
B) 0.43, and Jim regards tickets to sporting events as normal goods. 
C) 2.33, and Jim regards tickets to sporting events as inferior goods. 
D) 2.33, and Jim regards tickets to sporting events as normal goods.

Question 3

Figure 5-19        
-Refer to Figure 5-19. Which of the following statements is correct?

Accepted Answer

A) Supply curve A is perfectly elastic. 
B) Supply curve B is perfectly inelastic. 
C) Supply curve C is more inelastic than supply curve D. 
D) Supply curve D is unit elastic. 
A) Supply curve A is perfectly elastic. 
B) Supply curve B is perfectly inelastic. 
C) Supply curve C is more inelastic than supply curve D. 
D) Supply curve D is unit elastic.

Question 4

If the cross-price elasticity of demand for two goods is -4.5, then

Accepted Answer

A) the two goods are substitutes. 
B) the two goods are complements. 
C) one of the goods is normal while the other good is inferior. 
D) one of the goods is a luxury while the other good is a necessity. 
A) the two goods are substitutes. 
B) the two goods are complements. 
C) one of the goods is normal while the other good is inferior. 
D) one of the goods is a luxury while the other good is a necessity.

Question 5

If the price elasticity of demand for a good is 0.5, then a 5 percent increase in price results in a

Accepted Answer

A) 0.1 percent decrease in the quantity demanded. 
B) 1 percent decrease in the quantity demanded. 
C) 2.5 percent decrease in the quantity demanded. 
D) 10 percent decrease in the quantity demanded. 
A) 0.1 percent decrease in the quantity demanded. 
B) 1 percent decrease in the quantity demanded. 
C) 2.5 percent decrease in the quantity demanded. 
D) 10 percent decrease in the quantity demanded.

Question 6

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 7

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

Accepted Answer

A) 0.07. 
B) 0.18. 
C) 0.41. 
D) 2.45. 
A) 0.07. 
B) 0.18. 
C) 0.41. 
D) 2.45.

Question 8

If sellers do not adjust their quantities supplied at all in response to a change in price,

Accepted Answer

A) advances in technology must be prevalent. 
B) the time period under consideration must be very long. 
C) supply is perfectly elastic. 
D) supply is perfectly inelastic. 
A) advances in technology must be prevalent. 
B) the time period under consideration must be very long. 
C) supply is perfectly elastic. 
D) supply is perfectly inelastic.

Question 9

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 10

Necessities tend to have inelastic demands, whereas luxuries tend to have elastic demands.

Accepted Answer

A) True 
 B)False

Question 11

Helen's Honey Hut supplies 20 jars of honey per week when the price of honey is $6 per jar and supplies 30 jars per week when the price of is $8 per jar, so the price elasticity of supply over this price range is 1.4.

Accepted Answer

A) True 
 B)False

Question 12

Table 5-7
The following table shows a portion of the demand schedule for a particular good at various levels of income.  
-Refer to Table 5-7. Using the midpoint method, when income equals $7,500, what is the price elasticity of demand between $16 and $20?

Accepted Answer

A) 0.56 
B) 0.75 
C) 1.33 
D) 1.80 
A) 0.56 
B) 0.75 
C) 1.33 
D) 1.80

Question 13

When supply is perfectly elastic, the value of the price elasticity of supply is

Accepted Answer

A) 0. 
B) 1. 
C) greater than 0 and less than 1. 
D) infinity. 
A) 0. 
B) 1. 
C) greater than 0 and less than 1. 
D) infinity.

Question 14

When we move upward and to the left along a linear, downward-sloping demand curve, price elasticity of demand

Accepted Answer

A) first becomes smaller, then larger. 
B) always becomes larger. 
C) always becomes smaller. 
D) first becomes larger, then smaller. 
A) first becomes smaller, then larger. 
B) always becomes larger. 
C) always becomes smaller. 
D) first becomes larger, then smaller.

Question 15

If the price elasticity of demand for a good is 0.2, then a 3 percent decrease in price results in a

Accepted Answer

A) 0.6 percent increase in the quantity demanded. 
B) 1.5 percent increase in the quantity demanded. 
C) 2 percent increase in the quantity demanded. 
D) 6 percent increase in the quantity demanded. 
A) 0.6 percent increase in the quantity demanded. 
B) 1.5 percent increase in the quantity demanded. 
C) 2 percent increase in the quantity demanded. 
D) 6 percent increase in the quantity demanded.

Question 16

Consider luxury weekend hotel packages in Las Vegas. When the price is $250, the quantity demanded is 2,000 packages per week. When the price is $280, the quantity demanded is 1,700 packages per week. Using the midpoint method, the price elasticity of demand is about

Accepted Answer

A) 1.43, and an increase in the price will cause hotels' total revenue to decrease. 
B) 1.43, and an increase in the price will cause hotels' total revenue to increase. 
C) 0.70, and an increase in the price will cause hotels' total revenue to decrease. 
D) 0.70, and an increase in the price will cause hotels' total revenue to increase. 
A) 1.43, and an increase in the price will cause hotels' total revenue to decrease. 
B) 1.43, and an increase in the price will cause hotels' total revenue to increase. 
C) 0.70, and an increase in the price will cause hotels' total revenue to decrease. 
D) 0.70, and an increase in the price will cause hotels' total revenue to increase.

Question 17

If the income elasticity of demand for a good is -1.40, is the good a normal or inferior good?

Accepted Answer

The good i

Question 18

Suppose the price of apples decreases from $1.00 to $0.80 each and, as a result, the quantity of apples demanded increases from 800 to 1,000. Using the midpoint method, the price elasticity of demand for apples in the given price range is

Accepted Answer

A) 0.22. 
B) 0.5. 
C) 1.0. 
D) 4.5. 
A) 0.22. 
B) 0.5. 
C) 1.0. 
D) 4.5.

Question 19

If the price elasticity of supply is 0.5 and the quantity supplied decreases by 6%, then the price must have decreased by 3%.

Accepted Answer

A) True 
 B)False

Question 20

Figure 5-4  
-Refer to Figure 5-4. Assume the section of the demand curve from B to C corresponds to prices between $0 and $15. Then, when the price changes between $7 and $9,

Accepted Answer

A) quantity demanded changes proportionately less than the price. 
B) quantity demanded changes proportionately more than the price. 
C) quantity demanded changes the same amount proportionately as price. 
D) the price elasticity of demand equals zero. 
A) quantity demanded changes proportionately less than the price. 
B) quantity demanded changes proportionately more than the price. 
C) quantity demanded changes the same amount proportionately as price. 
D) the price elasticity of demand equals zero.

Exam 5: Elasticity and Its Application

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

Last year, Jim bought 8 tickets to sporting events when his income was $30,000. This year, his income is $33,000, and he purchased 10 tickets to sporting events. Holding other factors constant and using the midpoint method, it follows that Jim's income elasticity of demand is about

Figure 5-19 -Refer to Figure 5-19. Which of the following statements is correct?

If the cross-price elasticity of demand for two goods is -4.5, then

If the price elasticity of demand for a good is 0.5, then a 5 percent increase in price results in a

In the market for oil in the short run, demand

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

If sellers do not adjust their quantities supplied at all in response to a change in price,

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

Necessities tend to have inelastic demands, whereas luxuries tend to have elastic demands.

Helen's Honey Hut supplies 20 jars of honey per week when the price of honey is $6 per jar and supplies 30 jars per week when the price of is $8 per jar, so the price elasticity of supply over this price range is 1.4.

Table 5-7 The following table shows a portion of the demand schedule for a particular good at various levels of income. -Refer to Table 5-7. Using the midpoint method, when income equals $7,500, what is the price elasticity of demand between $16 and $20?

When supply is perfectly elastic, the value of the price elasticity of supply is

When we move upward and to the left along a linear, downward-sloping demand curve, price elasticity of demand

If the price elasticity of demand for a good is 0.2, then a 3 percent decrease in price results in a

Consider luxury weekend hotel packages in Las Vegas. When the price is $250, the quantity demanded is 2,000 packages per week. When the price is $280, the quantity demanded is 1,700 packages per week. Using the midpoint method, the price elasticity of demand is about

If the income elasticity of demand for a good is -1.40, is the good a normal or inferior good?

Suppose the price of apples decreases from $1.00 to $0.80 each and, as a result, the quantity of apples demanded increases from 800 to 1,000. Using the midpoint method, the price elasticity of demand for apples in the given price range is

If the price elasticity of supply is 0.5 and the quantity supplied decreases by 6%, then the price must have decreased by 3%.

Figure 5-4 -Refer to Figure 5-4. Assume the section of the demand curve from B to C corresponds to prices between $0 and $15. Then, when the price changes between $7 and $9,

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

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