Question 1

Suppose the price elasticity of demand for a product is 0.5. If a supplier wants to increase revenue, what change should it make to price, if any?

Accepted Answer

The answer of Suppose the price elasticity of demand for...

Question 2

Figure 5-4  
-Refer to Figure 5-4. If the price decreases 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 increase, then decrease until total revenue is maximized. 
A) increase. 
B) stay the same. 
C) decrease. 
D) first increase, then decrease until total revenue is maximized.

Question 3

If the price elasticity of demand for a good is 1.4, then a 14 percent increase in the quantity demanded must be the result of

Accepted Answer

A) a 0.1 percent decrease in the price. 
B) a 1 percent decrease in the price. 
C) a 10 percent decrease in the price. 
D) a 19.6 percent decrease in the price. 
A) a 0.1 percent decrease in the price. 
B) a 1 percent decrease in the price. 
C) a 10 percent decrease in the price. 
D) a 19.6 percent decrease in the price.

Question 4

Why was OPEC unable to maintain high oil prices in the long run?

Accepted Answer

A) Demand and supply are both elastic in the long run compared to the short run. 
B) Demand and supply are both inelastic in the long run compared to the short run. 
C) Demand is elastic and supply is inelastic in the long run compared to the short run. 
D) Demand is inelastic and supply is elastic in the long run compared to the short run. 
A) Demand and supply are both elastic in the long run compared to the short run. 
B) Demand and supply are both inelastic in the long run compared to the short run. 
C) Demand is elastic and supply is inelastic in the long run compared to the short run. 
D) Demand is inelastic and supply is elastic in the long run compared to the short run.

Question 5

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

Accepted Answer

A) laptop computers 
B) tablets 
C) Microsoft® Surface tablets 
D) cell phones 
A) laptop computers 
B) tablets 
C) Microsoft® Surface tablets 
D) cell phones

Question 6

The price elasticity of demand for a good measures the willingness of

Accepted Answer

A) consumers to buy less of the good as price rises. 
B) consumers to avoid monopolistic markets in favor of competitive markets. 
C) firms to produce more of a good as price rises. 
D) firms to respond to the tastes of consumers. 
A) consumers to buy less of the good as price rises. 
B) consumers to avoid monopolistic markets in favor of competitive markets. 
C) firms to produce more of a good as price rises. 
D) firms to respond to the tastes of consumers.

Question 7

If the income elasticity of demand for a good is 0.56, is the good a normal or inferior good?

Accepted Answer

The good i

Question 8

Suppose that good X is a luxury and that good Y is a necessity. Which good would you expect to have more price elastic demand?

Accepted Answer

The answer of Suppose that good X is a luxury...

Question 9

Figure 5-2  
-Refer to Figure 5-2. As price falls from Pa to Pb, which demand curve represents the most elastic demand?

Accepted Answer

A) D1 
B) D2 
C) D3 
D) All of the above are equally elastic. 
A) D1 
B) D2 
C) D3 
D) All of the above are equally elastic.

Question 10

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

Accepted Answer

A) 1.67 
B) 1.19 
C) 0.84 
D) 0.61 
A) 1.67 
B) 1.19 
C) 0.84 
D) 0.61

Question 11

Demand is said to be inelastic if

Accepted Answer

A) buyers respond substantially to changes in the price of the good. 
B) demand shifts only slightly when the price of the good changes. 
C) the quantity demanded changes only slightly when the price of the good changes. 
D) the price of the good responds only slightly to changes in demand. 
A) buyers respond substantially to changes in the price of the good. 
B) demand shifts only slightly when the price of the good changes. 
C) the quantity demanded changes only slightly when the price of the good changes. 
D) the price of the good responds only slightly to changes in demand.

Question 12

A decrease in supply will cause the smallest increase in price when

Accepted Answer

A) both supply and demand are inelastic. 
B) demand is elastic and supply is inelastic. 
C) both supply and demand are elastic. 
D) demand is inelastic and supply is elastic. 
A) both supply and demand are inelastic. 
B) demand is elastic and supply is inelastic. 
C) both supply and demand are elastic. 
D) demand is inelastic and supply is elastic.

Question 13

Figure 5-17  
-Refer to Figure 5-17. Using the midpoint method, what is the price elasticity of supply between point B and point C?

Accepted Answer

A) 1.44 
B) 1.29 
C) 0.96 
D) 0.69 
A) 1.44 
B) 1.29 
C) 0.96 
D) 0.69

Question 14

If the price elasticity of demand for a good is 0.3, then a 20 percent decrease in price results in a

Accepted Answer

A) 0.015 percent increase in the quantity demanded. 
B) 0.6 percent increase in the quantity demanded. 
C) 6 percent increase in the quantity demanded. 
D) 66 percent increase in the quantity demanded. 
A) 0.015 percent increase in the quantity demanded. 
B) 0.6 percent increase in the quantity demanded. 
C) 6 percent increase in the quantity demanded. 
D) 66 percent increase in the quantity demanded.

Question 15

A good will have a more elastic demand, the

Accepted Answer

A) greater the availability of close substitutes. 
B) more broad the definition of the market. 
C) shorter the period of time. 
D) more it is regarded as a necessity. 
A) greater the availability of close substitutes. 
B) more broad the definition of the market. 
C) shorter the period of time. 
D) more it is regarded as a necessity.

Question 16

If a 20% change in price results in a 15% change in quantity supplied, then the price elasticity of supply is about

Accepted Answer

A) 1.33, and supply is elastic. 
B) 1.33, and supply is inelastic. 
C) 0.75, and supply is elastic. 
D) 0.75, and supply is inelastic. 
A) 1.33, and supply is elastic. 
B) 1.33, and supply is inelastic. 
C) 0.75, and supply is elastic. 
D) 0.75, and supply is inelastic.

Question 17

Skip's Sealcoating Service increased its total monthly revenue from $12,000 to $13,500 when it raised the price of driveway repairs from $600 to $750. The price elasticity of demand for Skip's Sealcoating Service is

Accepted Answer

A) 0.11. 
B) 0.47. 
C) 1.12. 
D) 2.11. 
A) 0.11. 
B) 0.47. 
C) 1.12. 
D) 2.11.

Question 18

If the price elasticity of supply for wheat is less than 1, then the supply of wheat is

Accepted Answer

A) inelastic. 
B) elastic. 
C) unit elastic. 
D) quite sensitive to changes in income. 
A) inelastic. 
B) elastic. 
C) unit elastic. 
D) quite sensitive to changes in income.

Question 19

Scenario 5-4
Milk has an inelastic demand, and beef has an elastic demand. Suppose that a mysterious increase in bovine infertility decreases both the population of dairy cows and the population of beef cattle by 50 percent.
-Refer to Scenario 5-4. Total consumer spending on milk will

Accepted Answer

A) increase, and total consumer spending on beef will increase. 
B) increase, and total consumer spending on beef will decrease. 
C) decrease, and total consumer spending on beef will increase. 
D) decrease, and total consumer spending on beef will decrease. 
A) increase, and total consumer spending on beef will increase. 
B) increase, and total consumer spending on beef will decrease. 
C) decrease, and total consumer spending on beef will increase. 
D) decrease, and total consumer spending on beef will decrease.

Question 20

If the price elasticity of demand is equal to 1, then demand is unit elastic.

Accepted Answer

A) True 
 B)False

Exam 5: Elasticity and Its Application

Suppose the price elasticity of demand for a product is 0.5. If a supplier wants to increase revenue, what change should it make to price, if any?

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

If the price elasticity of demand for a good is 1.4, then a 14 percent increase in the quantity demanded must be the result of

Why was OPEC unable to maintain high oil prices in the long run?

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

The price elasticity of demand for a good measures the willingness of

If the income elasticity of demand for a good is 0.56, is the good a normal or inferior good?

Suppose that good X is a luxury and that good Y is a necessity. Which good would you expect to have more price elastic demand?

Figure 5-2 -Refer to Figure 5-2. As price falls from Pa to Pb, which demand curve represents the most elastic demand?

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

Demand is said to be inelastic if

A decrease in supply will cause the smallest increase in price when

Figure 5-17 -Refer to Figure 5-17. Using the midpoint method, what is the price elasticity of supply between point B and point C?

If the price elasticity of demand for a good is 0.3, then a 20 percent decrease in price results in a

A good will have a more elastic demand, the

If a 20% change in price results in a 15% change in quantity supplied, then the price elasticity of supply is about

Skip's Sealcoating Service increased its total monthly revenue from $12,000 to $13,500 when it raised the price of driveway repairs from $600 to $750. The price elasticity of demand for Skip's Sealcoating Service is

If the price elasticity of supply for wheat is less than 1, then the supply of wheat is

Scenario 5-4 Milk has an inelastic demand, and beef has an elastic demand. Suppose that a mysterious increase in bovine infertility decreases both the population of dairy cows and the population of beef cattle by 50 percent. -Refer to Scenario 5-4. Total consumer spending on milk will

If the price elasticity of demand is equal to 1, 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

Applications: 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

Measuring a Nation S Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

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 Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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