Question 1

When quantity moves proportionately the same amount as price, demand is

Accepted Answer

A) elastic, and the price elasticity of demand is 1. 
B) perfectly elastic, and the price elasticity of demand is infinitely large. 
C) perfectly inelastic, and the price elasticity of demand is 0. 
D) unit elastic, and the price elasticity of demand is 1. 
A) elastic, and the price elasticity of demand is 1. 
B) perfectly elastic, and the price elasticity of demand is infinitely large. 
C) perfectly inelastic, and the price elasticity of demand is 0. 
D) unit elastic, and the price elasticity of demand is 1.

Question 2

You and your college roommate eat three packages of Ramen noodles each week. After graduation last month, both of you were hired at several times your college income. Your roommate still enjoys Ramen noodles very much and buys even more, but you plan to buy fewer Ramen noodles in favor of foods you prefer more. When looking at income elasticity of demand for Ramen noodles, yours would

Accepted Answer

A) be negative and your roommate's would be positive. 
B) be positive and your roommate's would be negative. 
C) be zero and your roommate's would approach infinity. 
D) approach infinity and your roommate's would be zero. 
A) be negative and your roommate's would be positive. 
B) be positive and your roommate's would be negative. 
C) be zero and your roommate's would approach infinity. 
D) approach infinity and your roommate's would be zero.

Question 3

Suppose that quantity demand rises by 10% as a result of a 15% decrease in price. The price elasticity of demand for this good is

Accepted Answer

A) inelastic and equal to 0.67. 
B) elastic and equal to 0.67. 
C) inelastic and equal to 1.50. 
D) elastic and equal to 1.50. 
A) inelastic and equal to 0.67. 
B) elastic and equal to 0.67. 
C) inelastic and equal to 1.50. 
D) elastic and equal to 1.50.

Question 4

Figure 5-15  
-Refer to Figure 5-15. Using the midpoint method, what is the price elasticity of supply between points D and G?

Accepted Answer

A) 1.89 
B) 1.26 
C) 0.53 
D) 0.34 
A) 1.89 
B) 1.26 
C) 0.53 
D) 0.34

Question 5

Table 5-3
Consider the following demand schedule.  
-Refer to Table 5-3. Using the midpoint method, what is the price elasticity of demand between $12 and $15?

Accepted Answer

The answer of Table 5-3
Consider the following demand schedule. ...

Question 6

Suppose that 300 bottles of soda are demanded at a particular price. If the price of a bottle of soda rises from that price by 6 percent, the number of bottles of soda demanded falls to 275. Using the midpoint approach to calculate the price elasticity of demand, it follows that the

Accepted Answer

A) demand for bottles of soda in this price range is perfectly elastic. 
B) price increase will increase the total revenue of soda sellers. 
C) price elasticity of demand for bottles of soda in this price range is about 0.69. 
D) price elasticity of demand for bottles of soda in this price range is about 1.45. 
A) demand for bottles of soda in this price range is perfectly elastic. 
B) price increase will increase the total revenue of soda sellers. 
C) price elasticity of demand for bottles of soda in this price range is about 0.69. 
D) price elasticity of demand for bottles of soda in this price range is about 1.45.

Question 7

Along the elastic portion of a linear demand curve, total revenue rises as price rises.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements is correct?

Accepted Answer

A) The demand for medicine is more elastic than the demand for sailboats. 
B) The demand for iPads is more elastic than the demand for tablets in general. 
C) The demand for cell phones is more elastic over a short period of time than over a long period of time. 
D) All of the above are correct. 
A) The demand for medicine is more elastic than the demand for sailboats. 
B) The demand for iPads is more elastic than the demand for tablets in general. 
C) The demand for cell phones is more elastic over a short period of time than over a long period of time. 
D) All of the above are correct.

Question 9

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

Accepted Answer

Total revenue will be maximize

Question 10

Which of the following statements is correct?

Accepted Answer

A) Advocates for drug-interdiction policies that reduce the supply of illegal drugs argue that the demand for illegal drugs may be more responsive in the long run than in the short run. 
B) The demand for illegal drugs is price inelastic. 
C) Drug interdiction efforts that reduce the supply of illegal drugs may increase drug-related crimes. 
D) All of the above are correct. 
A) Advocates for drug-interdiction policies that reduce the supply of illegal drugs argue that the demand for illegal drugs may be more responsive in the long run than in the short run. 
B) The demand for illegal drugs is price inelastic. 
C) Drug interdiction efforts that reduce the supply of illegal drugs may increase drug-related crimes. 
D) All of the above are correct.

Question 11

Figure 5-3  
-Refer to Figure 5-3. Which demand curve is unit elastic?

Accepted Answer

A) A 
B) B 
C) D 
D) None of the above. 
A) A 
B) B 
C) D 
D) None of the above.

Question 12

For a particular good, a 2 percent increase in price causes a 12 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Accepted Answer

A) There are no close substitutes for this good. 
B) The good is a luxury. 
C) The market for the good is broadly defined. 
D) The relevant time horizon is short. 
A) There are no close substitutes for this good. 
B) The good is a luxury. 
C) The market for the good is broadly defined. 
D) The relevant time horizon is short.

Question 13

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 14

Figure 5-14  
-Refer to Figure 5-14. 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 15

Whether a good is a luxury or necessity depends on the

Accepted Answer

A) price of the good. 
B) preferences of the buyer. 
C) intrinsic properties of the good. 
D) scarcity of the good. 
A) price of the good. 
B) preferences of the buyer. 
C) intrinsic properties of the good. 
D) scarcity of the good.

Question 16

To determine whether a good is considered normal or inferior, one could examine the value of the

Accepted Answer

A) income elasticity of demand for that good. 
B) price elasticity of demand for that good. 
C) price elasticity of supply for that good. 
D) cross-price elasticity of demand for that good. 
A) income elasticity of demand for that good. 
B) price elasticity of demand for that good. 
C) price elasticity of supply for that good. 
D) cross-price elasticity of demand for that good.

Question 17

If the price elasticity of demand for a good is 5, then a 10 percent increase in price results in a

Accepted Answer

A) 0.5 percent decrease in the quantity demanded. 
B) 2 percent decrease in the quantity demanded. 
C) 5 percent decrease in the quantity demanded. 
D) 50 percent decrease in the quantity demanded. 
A) 0.5 percent decrease in the quantity demanded. 
B) 2 percent decrease in the quantity demanded. 
C) 5 percent decrease in the quantity demanded. 
D) 50 percent decrease in the quantity demanded.

Question 18

If a firm that produces honey is facing elastic demand, then the firm would decrease price to increase revenue.

Accepted Answer

A) True 
 B)False

Question 19

If sellers respond to very small changes in price by adjusting their quantity supplied by extremely large amounts, the price elasticity of supply approaches

Accepted Answer

A) zero, and the supply curve is horizontal. 
B) zero, and the supply curve is vertical. 
C) infinity, and the supply curve is horizontal. 
D) infinity, and the supply curve is vertical. 
A) zero, and the supply curve is horizontal. 
B) zero, and the supply curve is vertical. 
C) infinity, and the supply curve is horizontal. 
D) infinity, and the supply curve is vertical.

Question 20

Table 5-4
The following table shows the demand schedule for a particular good.  
-Refer to Table 5-4. Using the midpoint method, when price falls from $8 to $4, the price elasticity of demand is

Accepted Answer

A) 0.43 
B) 0.67 
C) 1 
D) 2.33 
A) 0.43 
B) 0.67 
C) 1 
D) 2.33

Exam 5: Elasticity and Its Application

When quantity moves proportionately the same amount as price, demand is

Suppose that quantity demand rises by 10% as a result of a 15% decrease in price. The price elasticity of demand for this good is

Figure 5-15 -Refer to Figure 5-15. Using the midpoint method, what is the price elasticity of supply between points D and G?

Table 5-3 Consider the following demand schedule. -Refer to Table 5-3. Using the midpoint method, what is the price elasticity of demand between $12 and $15?

Suppose that 300 bottles of soda are demanded at a particular price. If the price of a bottle of soda rises from that price by 6 percent, the number of bottles of soda demanded falls to 275. Using the midpoint approach to calculate the price elasticity of demand, it follows that the

Along the elastic portion of a linear demand curve, total revenue rises as price rises.

Which of the following statements is correct?

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

Which of the following statements is correct?

Figure 5-3 -Refer to Figure 5-3. Which demand curve is unit elastic?

For a particular good, a 2 percent increase in price causes a 12 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

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

Figure 5-14 -Refer to Figure 5-14. Using the midpoint method, what is the price elasticity of supply between $100 and $220?

Whether a good is a luxury or necessity depends on the

To determine whether a good is considered normal or inferior, one could examine the value of the

If the price elasticity of demand for a good is 5, then a 10 percent increase in price results in a

If a firm that produces honey is facing elastic demand, then the firm would decrease price to increase revenue.

If sellers respond to very small changes in price by adjusting their quantity supplied by extremely large amounts, the price elasticity of supply approaches

Table 5-4 The following table shows the demand schedule for a particular good. -Refer to Table 5-4. Using the midpoint method, when price falls from $8 to $4, the price elasticity of demand is

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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