Question 1

Suppose demand is perfectly inelastic, and the supply of the good in question decreases. As a result,

Accepted Answer

A) the equilibrium price increases, and the equilibrium quantity is unchanged. 
B) the equilibrium quantity decreases, and the equilibrium price is unchanged. 
C) the equilibrium quantity and the equilibrium price both are unchanged. 
D) buyers' total expenditure on the good is unchanged. 
A) the equilibrium price increases, and the equilibrium quantity is unchanged. 
B) the equilibrium quantity decreases, and the equilibrium price is unchanged. 
C) the equilibrium quantity and the equilibrium price both are unchanged. 
D) buyers' total expenditure on the good is unchanged.

Question 2

Scenario 5-2
Milk has an inelastic demand, and steak 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 5-2. The change in equilibrium quantity will be

Accepted Answer

A) greater in the milk market than in the steak market. 
B) greater in the steak market than in the milk market. 
C) the same in the milk and steak markets. 
D) unknown without more information. 
A) greater in the milk market than in the steak market. 
B) greater in the steak market than in the milk market. 
C) the same in the milk and steak markets. 
D) unknown without more information.

Question 3

A government program that reduces land under cultivation can help farmers by raising prices but hurts consumers.

Accepted Answer

A) True 
 B)False

Question 4

A discovery that increases wheat yields per acre hurts farmers by increasing supply and lowering their total revenues.

Accepted Answer

A) True 
 B)False

Question 5

Scenario 5-2
Milk has an inelastic demand, and steak 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 5-2. The equilibrium quantity will

Accepted Answer

A) increase in both the milk and steak markets. 
B) increase in the milk market and decrease in the steak market. 
C) decrease in the milk market and increase in the steak market. 
D) decrease in both the milk and steak markets. 
A) increase in both the milk and steak markets. 
B) increase in the milk market and decrease in the steak market. 
C) decrease in the milk market and increase in the steak market. 
D) decrease in both the milk and steak markets.

Question 6

Table 5-5
​
​
 $$\begin{array} { | c | c | } 
\hline \text { Price } & \text { Quantity Demanded } \
\hline \$ 0 & 50 \
\hline \$ 2 & 40 \
\hline \$ 4 & 30 \
\hline \$ 6 & 20 \
\hline 48 & 10 \
\hline
\end{array}$$
-Refer to Table 5-5. Between which two quantities listed is demand most inelastic?

Accepted Answer

The answer of Table 5-5
​
​
 \[\begin{array} { | c |...

Question 7

If the cross-price elasticity of demand between two goods is negative, what is the relationship between the two goods?

Accepted Answer

The goods

Question 8

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 9

An advantage of using the midpoint method to calculate the price elasticity of demand is that it uses the metric system.

Accepted Answer

A) True 
 B)False

Question 10

Suppose that when the price of good X increases from $600 to $720, the quantity demanded of good Y decreases from 67 to 15. Using the midpoint method, the cross-price elasticity of demand is about

Accepted Answer

A) 6.98, and X and Y are substitutes. 
B) -0.14, and X and Y are complements. 
C) 0.14, and X and Y are substitutes. 
D) -6.98, and X and Y are complements. 
A) 6.98, and X and Y are substitutes. 
B) -0.14, and X and Y are complements. 
C) 0.14, and X and Y are substitutes. 
D) -6.98, and X and Y are complements.

Question 11

Table 5-4
​
​
  
-Refer to Table 5-4. Using the midpoint method, which of the three supply curves represents the least elastic supply?

Accepted Answer

A) Supply curve A 
B) Supply curve B 
C) Supply curve C 
D) All three supply curves have the same elasticity. 
A) Supply curve A 
B) Supply curve B 
C) Supply curve C 
D) All three supply curves have the same elasticity.

Question 12

Demand is said to be price elastic if

Accepted Answer

A) the price of the good responds substantially to changes in demand. 
B) demand shifts substantially when income or the expected future price of the good changes. 
C) buyers do not respond much to changes in the price of the good. 
D) buyers respond substantially to changes in the price of the good. 
A) the price of the good responds substantially to changes in demand. 
B) demand shifts substantially when income or the expected future price of the good changes. 
C) buyers do not respond much to changes in the price of the good. 
D) buyers respond substantially to changes in the price of the good.

Question 13

Scenario 5-4
​
Consider the markets for mobile and landline telephone service. Suppose that when the average income of residents of Plainville is $55,000 per year, the quantity demanded of landline telephone service is 12,500 and the quantity demanded of mobile service is 28,000. Suppose that when the price of mobile service rises from $100 to $120 per month, the quantity demanded of landline service decreases to 11,000. Suppose also that when the average income increases to $60,000, the quantity demanded of mobile service increases to 33,000.
-Refer to Scenario 5-6. Considering the income elasticity, what type of good is mobile telephone service?

Accepted Answer

The answer of Scenario 5-4
​
Consider the markets for mobile and...

Question 14

Figure 5-8
   ​
-Refer to Figure 5-21. Using the midpoint method, what is the price elasticity of supply between $25 and $35?

Accepted Answer

The price

Question 15

If the cross-price elasticity of demand for two goods is negative, then the two goods are complements.

Accepted Answer

A) True 
 B)False

Question 16

A government program that reduces land under cultivation hurts farmers but helps consumers.

Accepted Answer

A) True 
 B)False

Question 17

With regard to elasticity, if a firm has a longer time to adjust to a price increase, supply will be more

Accepted Answer

The answer of With regard to elasticity, if a firm...

Question 18

If the cross-price elasticity of demand for two goods is negative, then the two goods are substitutes.

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 a firm is facing elastic demand, then the firm should decrease price to increase revenue.

Accepted Answer

A) True 
 B)False

Exam 5: Elasticity and Its Application

Suppose demand is perfectly inelastic, and the supply of the good in question decreases. As a result,

Scenario 5-2 Milk has an inelastic demand, and steak 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 5-2. The change in equilibrium quantity will be

A government program that reduces land under cultivation can help farmers by raising prices but hurts consumers.

A discovery that increases wheat yields per acre hurts farmers by increasing supply and lowering their total revenues.

Scenario 5-2 Milk has an inelastic demand, and steak 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 5-2. The equilibrium quantity will

Table 5-5 ​ ​ Price Quantity Demanded \ 0 50 \ 2 40 \ 4 30 \ 6 20 48 10 -Refer to Table 5-5. Between which two quantities listed is demand most inelastic?

If the cross-price elasticity of demand between two goods is negative, what is the relationship between the two goods?

Demand is said to be inelastic if

An advantage of using the midpoint method to calculate the price elasticity of demand is that it uses the metric system.

Suppose that when the price of good X increases from $600 to $720, the quantity demanded of good Y decreases from 67 to 15. Using the midpoint method, the cross-price elasticity of demand is about

Table 5-4 ​ ​ -Refer to Table 5-4. Using the midpoint method, which of the three supply curves represents the least elastic supply?

Demand is said to be price elastic if

Figure 5-8 ​ -Refer to Figure 5-21. Using the midpoint method, what is the price elasticity of supply between $25 and $35?

If the cross-price elasticity of demand for two goods is negative, then the two goods are complements.

A government program that reduces land under cultivation hurts farmers but helps consumers.

With regard to elasticity, if a firm has a longer time to adjust to a price increase, supply will be more

If the cross-price elasticity of demand for two goods is negative, then the two goods are substitutes.

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

If a firm is facing elastic demand, then the firm should decrease price to increase revenue.

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 Nations 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 5-5 Price Quantity Demanded \ 0 50 \ 2 40 \ 4 30 \ 6 20 48 10 -Refer to Table 5-5. Between which two quantities listed is demand most inelastic?

Table 5-4 -Refer to Table 5-4. Using the midpoint method, which of the three supply curves represents the least elastic supply?

Figure 5-8 -Refer to Figure 5-21. Using the midpoint method, what is the price elasticity of supply between $25 and $35?