Question 1

Figure 5-18  
-Refer to Figure 5-18. Using the midpoint method, what is the price elasticity of supply between $4 and $5?

Accepted Answer

A) 0.50 
B) 0.56 
C) 1.80 
D) 2.00 
A) 0.50 
B) 0.56 
C) 1.80 
D) 2.00

Question 2

Which of the following statements about the consumers' responses to rising gasoline prices is correct?

Accepted Answer

A) Because gasoline is a necessity, consumers do not decrease their quantity demanded in either the short run or the long run. 
B) Consumers react to a 10% increase in price with about a 10% decrease in quantity demanded in both the short run and long run. 
C) Consumers decrease their quantity demanded more in the short run than in the long run. 
D) Consumers decrease their quantity demanded more in the long run than in the short run. 
A) Because gasoline is a necessity, consumers do not decrease their quantity demanded in either the short run or the long run. 
B) Consumers react to a 10% increase in price with about a 10% decrease in quantity demanded in both the short run and long run. 
C) Consumers decrease their quantity demanded more in the short run than in the long run. 
D) Consumers decrease their quantity demanded more in the long run than in the short run.

Question 3

Table 5-5  
-Refer to Table 5-5. When price is between $5 and $9, demand is

Accepted Answer

A) elastic. 
B) unit elastic. 
C) inelastic. 
D) There is not enough information given to determine whether demand is elastic, unit elastic, or inelastic. 
A) elastic. 
B) unit elastic. 
C) inelastic. 
D) There is not enough information given to determine whether demand is elastic, unit elastic, or inelastic.

Question 4

For a particular good, an 8 percent increase in price causes a 4 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Accepted Answer

A) There are many 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 long. 
A) There are many 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 long.

Question 5

Supply tends to be more elastic in the short run and more inelastic in the long run.

Accepted Answer

A) True 
 B)False

Question 6

Table 5-9
​  
-Refer to Table 5-9. Which of the three supply curves represents the most elastic supply?

Accepted Answer

A) supply curve A 
B) supply curve B 
C) supply curve C 
D) There is no difference in the elasticity of the three supply curves. 
A) supply curve A 
B) supply curve B 
C) supply curve C 
D) There is no difference in the elasticity of the three supply curves.

Question 7

An advance in farm technology that results in an increased market supply is

Accepted Answer

A) good for farmers because it raises prices for their products but bad for consumers because it raises prices consumers pay for food. 
B) bad for farmers because total revenue will fall but good for consumers because prices for food will fall. 
C) good for farmers because it raises prices for their products and also good for consumers because more output is available for consumption. 
D) bad for farmers because total revenue will fall and bad for consumers because farmers will raise the price of food to increase their total revenue. 
A) good for farmers because it raises prices for their products but bad for consumers because it raises prices consumers pay for food. 
B) bad for farmers because total revenue will fall but good for consumers because prices for food will fall. 
C) good for farmers because it raises prices for their products and also good for consumers because more output is available for consumption. 
D) bad for farmers because total revenue will fall and bad for consumers because farmers will raise the price of food to increase their total revenue.

Question 8

Figure 5-5  
-Refer to Figure 5-5. At a price of $10 per unit, sellers' total revenue equals

Accepted Answer

A) $100. 
B) $450. 
C) $500. 
D) $1250. 
A) $100. 
B) $450. 
C) $500. 
D) $1250.

Question 9

If the quantity supplied is the same regardless of price, then supply is

Accepted Answer

A) elastic. 
B) perfectly elastic. 
C) perfectly inelastic. 
D) inelastic. 
A) elastic. 
B) perfectly elastic. 
C) perfectly inelastic. 
D) inelastic.

Question 10

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

Accepted Answer

A) clothing 
B) blue jeans 
C) Tommy Hilfiger jeans 
D) All three would have the same elasticity of demand because they are all related. 
A) clothing 
B) blue jeans 
C) Tommy Hilfiger jeans 
D) All three would have the same elasticity of demand because they are all related.

Question 11

If the income elasticity of demand for a good is negative, then the good must be an inferior good.

Accepted Answer

A) True 
 B)False

Question 12

Holding all other forces constant, when the price of gasoline rises, the number of gallons of gasoline demanded would fall substantially over a ten-year period because

Accepted Answer

A) buyers tend to be much less sensitive to a change in price when given more time to react. 
B) buyers tend to be much more sensitive to a change in price when given more time to react. 
C) buyers will have substantially more real income over a ten-year period. 
D) the quantity supplied of gasoline increases very little in response to an increase in the price of gasoline. 
A) buyers tend to be much less sensitive to a change in price when given more time to react. 
B) buyers tend to be much more sensitive to a change in price when given more time to react. 
C) buyers will have substantially more real income over a ten-year period. 
D) the quantity supplied of gasoline increases very little in response to an increase in the price of gasoline.

Question 13

A t-shirt maker would be willing to supply 75 t-shirts per day at a price of $18.00 each. At a price of $20.00, the t-shirt maker would be willing to supply 100 t-shirts. Using the midpoint method, the price elasticity of supply for t-shirts is about

Accepted Answer

A) 0.37, and supply is elastic. 
B) 0.37, and supply is inelastic. 
C) 2.71, and supply is elastic. 
D) 2.71, and supply is inelastic. 
A) 0.37, and supply is elastic. 
B) 0.37, and supply is inelastic. 
C) 2.71, and supply is elastic. 
D) 2.71, and supply is inelastic.

Question 14

Figure 5-12  
-Refer to Figure 5-12. Which of the following price changes would result in no change in sellers' total revenue?

Accepted Answer

A) The price increases from $15 to $21. 
B) The price increases from $18 to $21. 
C) The price decreases from $24 to $18. 
D) The price decreases from $27 to $24. 
A) The price increases from $15 to $21. 
B) The price increases from $18 to $21. 
C) The price decreases from $24 to $18. 
D) The price decreases from $27 to $24.

Question 15

If a 30 percent change in price causes a 15 percent change in quantity supplied, then the price elasticity of supply is about

Accepted Answer

A) 0.5, and supply is elastic. 
B) 0.5, and supply is inelastic. 
C) 2, and supply is inelastic. 
D) 2, and supply is elastic. 
A) 0.5, and supply is elastic. 
B) 0.5, and supply is inelastic. 
C) 2, and supply is inelastic. 
D) 2, and supply is elastic.

Question 16

Farm programs that pay farmers not to plant crops on all their land

Accepted Answer

A) hurt farmers by lowering their total revenue and hurt consumers by causing shortages of some food items. 
B) help farmers by cutting costs, which helps consumers by lowering food prices. 
C) help farmers by increasing total revenue in the market but hurt consumers by raising food prices. 
D) help farmers directly since they receive government payments but have no real effects on consumers. 
A) hurt farmers by lowering their total revenue and hurt consumers by causing shortages of some food items. 
B) help farmers by cutting costs, which helps consumers by lowering food prices. 
C) help farmers by increasing total revenue in the market but hurt consumers by raising food prices. 
D) help farmers directly since they receive government payments but have no real effects on consumers.

Question 17

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 rises from $8 to $12, the price elasticity of demand is

Accepted Answer

A) 0.4 
B) 1 
C) 1.5 
D) 2.33 
A) 0.4 
B) 1 
C) 1.5 
D) 2.33

Question 18

Figure 5-11  
-Refer to Figure 5-11. A decrease in price from $20 to $10 leads to a

Accepted Answer

A) decrease in total revenue of $200, so the price elasticity of demand is greater than 1 in this price range. 
B) decrease in total revenue of $200, so the price elasticity of demand is less than 1 in this price range. 
C) decrease in total revenue of $120, so the price elasticity of demand is less than 1 in this price range. 
D) decrease in total revenue of $120, so demand is elastic in this price range. 
A) decrease in total revenue of $200, so the price elasticity of demand is greater than 1 in this price range. 
B) decrease in total revenue of $200, so the price elasticity of demand is less than 1 in this price range. 
C) decrease in total revenue of $120, so the price elasticity of demand is less than 1 in this price range. 
D) decrease in total revenue of $120, so demand is elastic in this price range.

Question 19

If the price elasticity of supply is zero, then

Accepted Answer

A) supply is more elastic than it is in any other case. 
B) the supply curve is horizontal. 
C) the quantity supplied is the same, regardless of price. 
D) a change in demand will cause a relatively small change in the equilibrium price. 
A) supply is more elastic than it is in any other case. 
B) the supply curve is horizontal. 
C) the quantity supplied is the same, regardless of price. 
D) a change in demand will cause a relatively small change in the equilibrium price.

Question 20

Supply and demand both tend to be more elastic in the long run and more inelastic in the short run.

Accepted Answer

A) True 
 B)False

Exam 5: Elasticity and Its Application

Figure 5-18 -Refer to Figure 5-18. Using the midpoint method, what is the price elasticity of supply between $4 and $5?

Which of the following statements about the consumers' responses to rising gasoline prices is correct?

Table 5-5 -Refer to Table 5-5. When price is between $5 and $9, demand is

For a particular good, an 8 percent increase in price causes a 4 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Supply tends to be more elastic in the short run and more inelastic in the long run.

Table 5-9 ​ -Refer to Table 5-9. Which of the three supply curves represents the most elastic supply?

An advance in farm technology that results in an increased market supply is

Figure 5-5 -Refer to Figure 5-5. At a price of $10 per unit, sellers' total revenue equals

If the quantity supplied is the same regardless of price, then supply is

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

If the income elasticity of demand for a good is negative, then the good must be an inferior good.

Holding all other forces constant, when the price of gasoline rises, the number of gallons of gasoline demanded would fall substantially over a ten-year period because

A t-shirt maker would be willing to supply 75 t-shirts per day at a price of $18.00 each. At a price of $20.00, the t-shirt maker would be willing to supply 100 t-shirts. Using the midpoint method, the price elasticity of supply for t-shirts is about

Figure 5-12 -Refer to Figure 5-12. Which of the following price changes would result in no change in sellers' total revenue?

If a 30 percent change in price causes a 15 percent change in quantity supplied, then the price elasticity of supply is about

Farm programs that pay farmers not to plant crops on all their land

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 rises from $8 to $12, the price elasticity of demand is

Figure 5-11 -Refer to Figure 5-11. A decrease in price from $20 to $10 leads to a

If the price elasticity of supply is zero, then

Supply and demand both tend to be more elastic in the long run and more inelastic in the short run.

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

Filters

Table 5-9 -Refer to Table 5-9. Which of the three supply curves represents the most elastic supply?