Question 1

A perfectly elastic supply curve is:

Accepted Answer

A) never feasible in reality. 
B) vertical. 
C) upward sloped. 
D) horizontal. 
A) never feasible in reality. 
B) vertical. 
C) upward sloped. 
D) horizontal.

Question 2

All of the following would cause the supply curve to be moreelastic EXCEPT:

Accepted Answer

A) production of the good requires only a small share of the market for inputs. 
B) the good is primarily for local supply. 
C) the good is a manufactured good. 
D) there is potential difficulty to increasing the production of the good at constant unit cost. 
A) production of the good requires only a small share of the market for inputs. 
B) the good is primarily for local supply. 
C) the good is a manufactured good. 
D) there is potential difficulty to increasing the production of the good at constant unit cost.

Question 3

The manager of a company notices that the company's totalrevenue would increase if the manager raises the price of thecompany's product. Accordingly, the manager can assert thatthe demand for the company's product is:

Accepted Answer

A) elastic. 
B) inelastic. 
C) unit elastic. 
D) zero elastic. 
A) elastic. 
B) inelastic. 
C) unit elastic. 
D) zero elastic.

Question 4

(Figure: Slave Redemption and Elasticity) Refer to the figure.How many new slaves are captured after the redemptionprogram is installed?

Accepted Answer

A) 1,400 
B) 800 
C) 400 
D) 1,000 
A) 1,400 
B) 800 
C) 400 
D) 1,000

Question 5

If the demand for a good is elastic, then firms producing thegood should ________ price in order to increase revenue.

Accepted Answer

A) increase 
B) decrease 
C) hold constant 
D) either increase or decrease 
A) increase 
B) decrease 
C) hold constant 
D) either increase or decrease

Question 6

If the elasticity of supply is 2.0, what happens to quantitysupplied following a 7 percent increase in price?
Quantitysupplied increases:

Accepted Answer

A) 3.5 percent. 
B) 2.9 percent. 
C) 14 percent. 
D) 9 percent. 
A) 3.5 percent. 
B) 2.9 percent. 
C) 14 percent. 
D) 9 percent.

Question 7

If the supply of a product is inelastic, a large price increase will:

Accepted Answer

A) not have an effect on the quantity supplied. 
B) only bring about a small increase in quantity supplied.(True Answer )Correct 
C) cause the supply curve to increase by a nontrivial amount. 
D) cause a modest decrease in supply. 
A) not have an effect on the quantity supplied. 
B) only bring about a small increase in quantity supplied.(True Answer )Correct 
C) cause the supply curve to increase by a nontrivial amount. 
D) cause a modest decrease in supply.

Question 8

Which of the following is a reason why the demand curve for anitem would be more elastic?

Accepted Answer

A) The item is a necessity. 
B) People's incomes are very high relative to the cost of the item. 
C) The item has many very good substitutes. 
D) The cost of the item forms a very small part of the consumer's budgets. 
A) The item is a necessity. 
B) People's incomes are very high relative to the cost of the item. 
C) The item has many very good substitutes. 
D) The cost of the item forms a very small part of the consumer's budgets.

Question 9

A 4 percent increase in the price of beer will cause a 1 percentdecline in the quantity of beer demanded. The demand for beeris:

Accepted Answer

A) elastic. 
B) unitary elastic. 
C) inelastic. 
D) elastic at 4 (in absolute value). 
A) elastic. 
B) unitary elastic. 
C) inelastic. 
D) elastic at 4 (in absolute value).

Question 10

The price elasticity of demand is:

Accepted Answer

A) the responsiveness of price to changes in the quantity demanded of the product. 
B) the responsiveness of quantity demanded to changes in the price of the product. 
C) the change in the firm's total revenue when prices change. 
D) exactly the same as the slope of the demand curve. 
A) the responsiveness of price to changes in the quantity demanded of the product. 
B) the responsiveness of quantity demanded to changes in the price of the product. 
C) the change in the firm's total revenue when prices change. 
D) exactly the same as the slope of the demand curve.

A perfectly elastic supply curve is:

All of the following would cause the supply curve to be moreelastic EXCEPT:

The manager of a company notices that the company's totalrevenue would increase if the manager raises the price of thecompany's product. Accordingly, the manager can assert thatthe demand for the company's product is:

(Figure: Slave Redemption and Elasticity) Refer to the figure.How many new slaves are captured after the redemptionprogram is installed?

If the demand for a good is elastic, then firms producing thegood should ________ price in order to increase revenue.

If the elasticity of supply is 2.0, what happens to quantitysupplied following a 7 percent increase in price? Quantitysupplied increases:

If the supply of a product is inelastic, a large price increase will:

Which of the following is a reason why the demand curve for anitem would be more elastic?

A 4 percent increase in the price of beer will cause a 1 percentdecline in the quantity of beer demanded. The demand for beeris:

The price elasticity of demand is:

Welcome to Economics

Choice in a World of Scarcity

Demand and Supply

Labor and Financial Markets

Consumer Choices

Production, Costs, and Industry Structure

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Monopoly and Antitrust Policy

Environmental Protection and Negative Externalities

Positive Externalities and Public Goods

Labor Markets and Income

Poverty and Economic Inequality

Information, Risk, and Insurance

Financial Markets

Public Economy

International Trade

Globalization and Protectionism

Consumer Utility and Optimization

Filters

Exam 5: Elasticity

A perfectly elastic supply curve is:

All of the following would cause the supply curve to be moreelastic EXCEPT:

The manager of a company notices that the company's totalrevenue would increase if the manager raises the price of thecompany's product. Accordingly, the manager can assert thatthe demand for the company's product is:

(Figure: Slave Redemption and Elasticity) Refer to the figure.How many new slaves are captured after the redemptionprogram is installed?

If the demand for a good is elastic, then firms producing thegood should ________ price in order to increase revenue.

If the elasticity of supply is 2.0, what happens to quantitysupplied following a 7 percent increase in price? Quantitysupplied increases:

If the supply of a product is inelastic, a large price increase will:

Which of the following is a reason why the demand curve for anitem would be more elastic?

A 4 percent increase in the price of beer will cause a 1 percentdecline in the quantity of beer demanded. The demand for beeris:

The price elasticity of demand is:

Welcome to Economics

Choice in a World of Scarcity

Demand and Supply

Labor and Financial Markets

Consumer Choices

Production, Costs, and Industry Structure

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Monopoly and Antitrust Policy

Environmental Protection and Negative Externalities

Positive Externalities and Public Goods

Labor Markets and Income

Poverty and Economic Inequality

Information, Risk, and Insurance

Financial Markets

Public Economy

International Trade

Globalization and Protectionism

Consumer Utility and Optimization

Filters