Question 1

Accepted Answer

A) unit elastic 
B) somewhat elastic 
C) perfectly elastic 
D) somewhat inelastic 
E) perfectly inelastic 
A) unit elastic 
B) somewhat elastic 
C) perfectly elastic 
D) somewhat inelastic 
E) perfectly inelastic

Question 2

If a firm raises the price of its product, its total revenue will

Accepted Answer

A) always increase 
B) increase only if demand is price inelastic 
C) increase only if demand is price elastic 
D) remain constant, regardless of price elasticity of demand 
E) never increase 
A) always increase 
B) increase only if demand is price inelastic 
C) increase only if demand is price elastic 
D) remain constant, regardless of price elasticity of demand 
E) never increase

Question 3

The absolute value of the price elasticity of demand at the midpoint of alinear demand curve is always

Accepted Answer

A) greater than one 
B) less than one 
C) one 
D) zero 
E) infinity 
A) greater than one 
B) less than one 
C) one 
D) zero 
E) infinity

Question 4

If the price of Pepsi­Cola increases from 50 cents to 60 cents per can andthe quantity demanded decreases from 100 cans to 50 cans, then the Pepsi­Cola Company could increase its total revenue by

Accepted Answer

A) lowering price 
B) decreasing quantity supplied 
C) leaving price the same 
D) raising price 
E) decreasing supply 
A) lowering price 
B) decreasing quantity supplied 
C) leaving price the same 
D) raising price 
E) decreasing supply

Question 5

If the sellers in the cigarette industry formed a cartel and decided to setprice along a straight­line downward­sloping demand curve, which pointwould they choose if they wanted to gain the highest total revenue?

Accepted Answer

A) The point nearest the vertical axis, where the price is highest. 
B) The point nearest the horizontal axis, where quantity demanded is greatest. 
C) One of the points higher up on the demand curve, where demand is elastic. 
D) One of the points lower down on the demand curve, where demand is inelastic. 
E) The point of unit elasticity, in the middle of the demand curve. 
A) The point nearest the vertical axis, where the price is highest. 
B) The point nearest the horizontal axis, where quantity demanded is greatest. 
C) One of the points higher up on the demand curve, where demand is elastic. 
D) One of the points lower down on the demand curve, where demand is inelastic. 
E) The point of unit elasticity, in the middle of the demand curve.

Question 6

As price decreases along a linear demand curve, price elasticity of demanddecreases.

Accepted Answer

A) True 
 B)False

Question 7

)   In Exhibit 5­7, demand is unit elastic

Accepted Answer

A) between points a and d 
B) between points d and e 
C) between points e and g 
D) only at the top and bottom of the curve 
E) anywhere along the curve 
A) between points a and d 
B) between points d and e 
C) between points e and g 
D) only at the top and bottom of the curve 
E) anywhere along the curve

Question 8

In calculating price elasticity of demand, which of the following is assumedto be constant?

Accepted Answer

A) the price of the product itself 
B) the quantity demanded of the product 
C) total revenue received from the sale of the product 
D) the prices of all other products 
E) none of the above 
A) the price of the product itself 
B) the quantity demanded of the product 
C) total revenue received from the sale of the product 
D) the prices of all other products 
E) none of the above

Question 9

Along a linear demand curve, total revenue is maximized when demand is

Accepted Answer

A) elastic 
B) inelastic 
C) unit elastic 
D) perfectly elastic 
E) perfectly inelastic 
A) elastic 
B) inelastic 
C) unit elastic 
D) perfectly elastic 
E) perfectly inelastic

Question 10

)   What is the price elasticity of demand in Exhibit 5­4?

Accepted Answer

A) 0 
B) ­1 
C) negative infinity 
D) 1 
E) ­100 
A) 0 
B) ­1 
C) negative infinity 
D) 1 
E) ­100

Question 11

Perfectly elastic demand curves are irrelevant, since real world demandcurves are never perfectly elastic.

Accepted Answer

A) True 
 B)False

Question 12

Along a linear demand curve, as the price rises, demand becomes more

Accepted Answer

A) steep 
B) elastic 
C) inelastic 
D) unit elastic 
E) variable 
A) steep 
B) elastic 
C) inelastic 
D) unit elastic 
E) variable

Question 13

If demand is price elastic, total revenue is

Accepted Answer

A) directly related to quantity demanded 
B) inversely related to quantity demanded 
C) directly related to price 
D) directly related to price and inversely related to quantity demanded 
E) not related to either price or to quantity demanded 
A) directly related to quantity demanded 
B) inversely related to quantity demanded 
C) directly related to price 
D) directly related to price and inversely related to quantity demanded 
E) not related to either price or to quantity demanded

Question 14

If the demand for ptyalin is unit elastic, then

Accepted Answer

A) total revenue decreases as quantity demanded increases 
B) total revenue increases as quantity demanded increases 
C) total revenue increases as price increases 
D) total revenue remains constant as price increases 
E) total revenue decreases as price increases 
A) total revenue decreases as quantity demanded increases 
B) total revenue increases as quantity demanded increases 
C) total revenue increases as price increases 
D) total revenue remains constant as price increases 
E) total revenue decreases as price increases

Question 15

The price elasticity of demand is equal to the slope of the demand curve.

Accepted Answer

A) True 
 B)False

Question 16

In Exhibit 5­8, which of the following statements is true at a quantity of 10?

Accepted Answer

A) Demand is elastic. 
B) Demand is inelastic. 
C) Demand is unit elastic. 
D) We cannot tell anything about elasticity of demand because this is a total revenue curve. 
E) Demand is perfectly elastic. 
A) Demand is elastic. 
B) Demand is inelastic. 
C) Demand is unit elastic. 
D) We cannot tell anything about elasticity of demand because this is a total revenue curve. 
E) Demand is perfectly elastic.

Question 17

If an increase in the price of a product from $100 to $200 per unit leads to adecrease in the quantity demanded from 10 to 8 units, then demand is

Accepted Answer

A) elastic 
B) inelastic 
C) unit elastic 
D) 0 
E) inferior 
A) elastic 
B) inelastic 
C) unit elastic 
D) 0 
E) inferior

Question 18

A perfectly elastic demand curve is

Accepted Answer

A) a vertical straight line 
B) a horizontal straight line 
C) a downward­sloping straight line 
D) an upward­sloping straight line 
E) not a straight line 
A) a vertical straight line 
B) a horizontal straight line 
C) a downward­sloping straight line 
D) an upward­sloping straight line 
E) not a straight line

Question 19

Along a downward­sloping linear demand curve, total revenue is greatest ifdemand is

Accepted Answer

A) inelastic 
B) elastic 
C) inelastic when prices are high 
D) elastic when prices are high 
E) unit elastic 
A) inelastic 
B) elastic 
C) inelastic when prices are high 
D) elastic when prices are high 
E) unit elastic

Question 20

If the price of Pepsi­Cola increases from 50 cents to 60 cents per can andthe quantity demanded decreases from 100 cans to 50 cans, then the demandfor Pepsi­Cola is

Accepted Answer

A) unit elastic 
B) perfectly elastic 
C) perfectly inelastic 
D) relatively elastic 
E) relatively inelastic 
A) unit elastic 
B) perfectly elastic 
C) perfectly inelastic 
D) relatively elastic 
E) relatively inelastic

If a firm raises the price of its product, its total revenue will

The absolute value of the price elasticity of demand at the midpoint of alinear demand curve is always

If the price of PepsiCola increases from 50 cents to 60 cents per can andthe quantity demanded decreases from 100 cans to 50 cans, then the PepsiCola Company could increase its total revenue by

If the sellers in the cigarette industry formed a cartel and decided to setprice along a straightline downwardsloping demand curve, which pointwould they choose if they wanted to gain the highest total revenue?

As price decreases along a linear demand curve, price elasticity of demanddecreases.

) In Exhibit 57, demand is unit elastic

In calculating price elasticity of demand, which of the following is assumedto be constant?

Along a linear demand curve, total revenue is maximized when demand is

) What is the price elasticity of demand in Exhibit 54?

Perfectly elastic demand curves are irrelevant, since real world demandcurves are never perfectly elastic.

Along a linear demand curve, as the price rises, demand becomes more

If demand is price elastic, total revenue is

If the demand for ptyalin is unit elastic, then

The price elasticity of demand is equal to the slope of the demand curve.

In Exhibit 58, which of the following statements is true at a quantity of 10?

If an increase in the price of a product from $100 to $200 per unit leads to adecrease in the quantity demanded from 10 to 8 units, then demand is

A perfectly elastic demand curve is

Along a downwardsloping linear demand curve, total revenue is greatest ifdemand is

If the price of PepsiCola increases from 50 cents to 60 cents per can andthe quantity demanded decreases from 100 cans to 50 cans, then the demandfor PepsiCola is

The Art and Science of Economic Analysis

Economic Tools and Economics Systems

Economic Decision Makers

Demand Supply and Markets

Consumer Choice and Demand

Production and Cost in the Firm

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital Interest Entrepreneurship and Corporate Finance

Transaction Costs Imperfect Information and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

Income Distribution and Poverty

International Trade

International Finance

Economic Development

Filters

Exam 5: Elasticity of Demand and Supply

If a firm raises the price of its product, its total revenue will

The absolute value of the price elasticity of demand at the midpoint of alinear demand curve is always

If the price of Pepsi­Cola increases from 50 cents to 60 cents per can andthe quantity demanded decreases from 100 cans to 50 cans, then the Pepsi­Cola Company could increase its total revenue by

If the sellers in the cigarette industry formed a cartel and decided to setprice along a straight­line downward­sloping demand curve, which pointwould they choose if they wanted to gain the highest total revenue?

As price decreases along a linear demand curve, price elasticity of demanddecreases.

) In Exhibit 5­7, demand is unit elastic

In calculating price elasticity of demand, which of the following is assumedto be constant?

Along a linear demand curve, total revenue is maximized when demand is

) What is the price elasticity of demand in Exhibit 5­4?

Perfectly elastic demand curves are irrelevant, since real world demandcurves are never perfectly elastic.

Along a linear demand curve, as the price rises, demand becomes more

If demand is price elastic, total revenue is

If the demand for ptyalin is unit elastic, then

The price elasticity of demand is equal to the slope of the demand curve.

In Exhibit 5­8, which of the following statements is true at a quantity of 10?

If an increase in the price of a product from $100 to $200 per unit leads to adecrease in the quantity demanded from 10 to 8 units, then demand is

A perfectly elastic demand curve is

Along a downward­sloping linear demand curve, total revenue is greatest ifdemand is

If the price of Pepsi­Cola increases from 50 cents to 60 cents per can andthe quantity demanded decreases from 100 cans to 50 cans, then the demandfor Pepsi­Cola is

The Art and Science of Economic Analysis

Economic Tools and Economics Systems

Economic Decision Makers

Demand Supply and Markets

Consumer Choice and Demand

Production and Cost in the Firm

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital Interest Entrepreneurship and Corporate Finance

Transaction Costs Imperfect Information and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

Income Distribution and Poverty

International Trade

International Finance

Economic Development

Filters

If the price of PepsiCola increases from 50 cents to 60 cents per can andthe quantity demanded decreases from 100 cans to 50 cans, then the PepsiCola Company could increase its total revenue by

If the sellers in the cigarette industry formed a cartel and decided to setprice along a straightline downwardsloping demand curve, which pointwould they choose if they wanted to gain the highest total revenue?

) In Exhibit 57, demand is unit elastic

) What is the price elasticity of demand in Exhibit 54?

In Exhibit 58, which of the following statements is true at a quantity of 10?

Along a downwardsloping linear demand curve, total revenue is greatest ifdemand is

If the price of PepsiCola increases from 50 cents to 60 cents per can andthe quantity demanded decreases from 100 cans to 50 cans, then the demandfor PepsiCola is