Question 1

Figure 5-3
   ​
-Refer to Figure 5-3. The maximum value of total revenue corresponds to a price of

Accepted Answer

A) $20. 
B) $50. 
C) $70. 
D) $100. 
A) $20. 
B) $50. 
C) $70. 
D) $100.

Question 2

Which of the following statements about agriculture in the United States is correct?

Accepted Answer

A) From the 1950s to today, agricultural output has approximately doubled. 
B) Because technological improvements increase the supply of a product for which demand is inelastic, an individual farmer would be better off not adopting the new technology. 
C) Increasing the supply of agricultural products typically benefits consumers but harms farmers as a group. 
D) Technological improvements typically increase both supply and revenue for individual farmers. 
A) From the 1950s to today, agricultural output has approximately doubled. 
B) Because technological improvements increase the supply of a product for which demand is inelastic, an individual farmer would be better off not adopting the new technology. 
C) Increasing the supply of agricultural products typically benefits consumers but harms farmers as a group. 
D) Technological improvements typically increase both supply and revenue for individual farmers.

Question 3

Which of the following is not a determinant of the price elasticity of demand for a good?

Accepted Answer

A) The definition of the market for the good 
B) The flatness of the supply curve for the good 
C) The availability of substitutes for the good 
D) Whether a good is a necessity or a luxury 
A) The definition of the market for the good 
B) The flatness of the supply curve for the good 
C) The availability of substitutes for the good 
D) Whether a good is a necessity or a luxury

Question 4

The income elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in income.

Accepted Answer

A) True 
 B)False

Question 5

Adam and Barb go to the store to purchase some lottery tickets. Without looking at the price, Adam says "I'll take 10 lottery tickets," and Barb says "I'll take $10 worth of lottery tickets." What is each person's price elasticity of demand for lottery tickets?

Accepted Answer

Since Adam wants 10 tickets regardless o

Question 6

If we observe that when the price of chocolate candy bars increases by 10%, quantity demanded decreases total by 10%, then the demand for chocolate candy bars is unit price elastic.

Accepted Answer

A) True 
 B)False

Question 7

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 unit elastic?

Accepted Answer

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

Question 8

Figure 5-6
   ​
-Refer to Figure 5-6. Using the midpoint method, what is the price elasticity of supply between points F and E?

Accepted Answer

A) 2.33 
B) 0.67 
C) 0.29 
D) 0.43 
A) 2.33 
B) 0.67 
C) 0.29 
D) 0.43

Question 9

If we observe that when the price of ice cream rises by 10%, ice cream manufacturers increase the quantity supplied of ice cream by 20%, then the price elasticity of supply is 2.

Accepted Answer

A) True 
 B)False

Question 10

Suppose that when the price rises by 20% for a particular good, the quantity demanded of that good falls by 10%. The price elasticity of demand for this good is equal to 2.0.

Accepted Answer

A) True 
 B)False

Question 11

A good will have a more inelastic demand, the

Accepted Answer

A) greater the availability of close substitutes. 
B) broader the definition of the market. 
C) longer the period of time. 
D) more it is regarded as a luxury. 
A) greater the availability of close substitutes. 
B) broader the definition of the market. 
C) longer the period of time. 
D) more it is regarded as a luxury.

Question 12

Price elasticity of demand along a linear, downward-sloping demand curve decreases as price falls.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following was not a reason OPEC failed to keep the price of oil high?

Accepted Answer

A) Over the long run, producers of oil outside of OPEC responded to higher prices by increasing oil exploration and by building new extraction capacity. 
B) Consumers responded to higher prices with greater conservation. 
C) Consumers replaced old inefficient cars with newer efficient ones. 
D) The agreement OPEC members signed allowed each country to produce as much oil as each wanted. 
A) Over the long run, producers of oil outside of OPEC responded to higher prices by increasing oil exploration and by building new extraction capacity. 
B) Consumers responded to higher prices with greater conservation. 
C) Consumers replaced old inefficient cars with newer efficient ones. 
D) The agreement OPEC members signed allowed each country to produce as much oil as each wanted.

Question 14

Cross-price elasticity of demand measures how

Accepted Answer

A) the price of one good changes in response to a change in the price of another good. 
B) the quantity demanded of one good changes in response to a change in the quantity demanded of another good. 
C) the quantity demanded of one good changes in response to a change in the price of another good. 
D) strongly normal or inferior a good is. 
A) the price of one good changes in response to a change in the price of another good. 
B) the quantity demanded of one good changes in response to a change in the quantity demanded of another good. 
C) the quantity demanded of one good changes in response to a change in the price of another good. 
D) strongly normal or inferior a good is.

Question 15

Demand for a good is said to be inelastic if the quantity demanded increases substantially when the price falls by a small amount.

Accepted Answer

A) True 
 B)False

Question 16

The price elasticity of demand measures

Accepted Answer

A) buyers' responsiveness to a change in the price of a good. 
B) the extent to which demand increases as additional buyers enter the market. 
C) how much more of a good consumers will demand when incomes rise. 
D) the movement along a supply curve when there is a change in demand. 
A) buyers' responsiveness to a change in the price of a good. 
B) the extent to which demand increases as additional buyers enter the market. 
C) how much more of a good consumers will demand when incomes rise. 
D) the movement along a supply curve when there is a change in demand.

Question 17

Suppose that gasoline prices increase dramatically this month. Kaliah commutes 100 miles to work each weekday. Over the next few months, Kaliah drives less on the weekends to try to save money. Within the year, she sells her home and purchases one only 10 miles from her place of employment. These examples illustrate the importance of

Accepted Answer

A) the time horizon in determining the price elasticity of demand. 
B) the availability of close substitutes in determining the price elasticity of demand. 
C) a necessity versus a luxury in determining the price elasticity of demand. 
D) the definition of a market in determining the price elasticity of demand. 
A) the time horizon in determining the price elasticity of demand. 
B) the availability of close substitutes in determining the price elasticity of demand. 
C) a necessity versus a luxury in determining the price elasticity of demand. 
D) the definition of a market in determining the price elasticity of demand.

Question 18

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 19

When small changes in price lead to infinite changes in quantity demanded, demand is perfectly

Accepted Answer

A) elastic, and the demand curve will be horizontal. 
B) inelastic, and the demand curve will be horizontal. 
C) elastic, and the demand curve will be vertical. 
D) inelastic, and the demand curve will be vertical. 
A) elastic, and the demand curve will be horizontal. 
B) inelastic, and the demand curve will be horizontal. 
C) elastic, and the demand curve will be vertical. 
D) inelastic, and the demand curve will be vertical.

Question 20

Income elasticity of demand measures how

Accepted Answer

A) the quantity demanded changes as consumer income changes. 
B) consumer purchasing power is affected by a change in the price of a good. 
C) the price of a good is affected when there is a change in consumer income. 
D) many units of a good a consumer can buy given a certain income level. 
A) the quantity demanded changes as consumer income changes. 
B) consumer purchasing power is affected by a change in the price of a good. 
C) the price of a good is affected when there is a change in consumer income. 
D) many units of a good a consumer can buy given a certain income level.

Exam 5: Elasticity and Its Application

Figure 5-3 ​ -Refer to Figure 5-3. The maximum value of total revenue corresponds to a price of

Which of the following statements about agriculture in the United States is correct?

Which of the following is not a determinant of the price elasticity of demand for a good?

The income elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in income.

Adam and Barb go to the store to purchase some lottery tickets. Without looking at the price, Adam says "I'll take 10 lottery tickets," and Barb says "I'll take $10 worth of lottery tickets." What is each person's price elasticity of demand for lottery tickets?

If we observe that when the price of chocolate candy bars increases by 10%, quantity demanded decreases total by 10%, then the demand for chocolate candy bars is unit price elastic.

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 unit elastic?

Figure 5-6 ​ -Refer to Figure 5-6. Using the midpoint method, what is the price elasticity of supply between points F and E?

If we observe that when the price of ice cream rises by 10%, ice cream manufacturers increase the quantity supplied of ice cream by 20%, then the price elasticity of supply is 2.

Suppose that when the price rises by 20% for a particular good, the quantity demanded of that good falls by 10%. The price elasticity of demand for this good is equal to 2.0.

A good will have a more inelastic demand, the

Price elasticity of demand along a linear, downward-sloping demand curve decreases as price falls.

Which of the following was not a reason OPEC failed to keep the price of oil high?

Cross-price elasticity of demand measures how

Demand for a good is said to be inelastic if the quantity demanded increases substantially when the price falls by a small amount.

The price elasticity of demand measures

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

When small changes in price lead to infinite changes in quantity demanded, demand is perfectly

Income elasticity of demand measures how

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

Figure 5-3 -Refer to Figure 5-3. The maximum value of total revenue corresponds to a price of

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 unit elastic?

Figure 5-6 -Refer to Figure 5-6. Using the midpoint method, what is the price elasticity of supply between points F and E?