Question 1

Answer the question based on the following table, which shows a demand schedule.   At a price of $3, the total revenues of sellers will be

Accepted Answer

A) $18. 
B) $12. 
C) $45. 
D) $5. 
A) $18. 
B) $12. 
C) $45. 
D) $5.

Question 2

Explain how colleges and universities charge students differently based on price elasticity of demand.

Accepted Answer

Price elasticity of demand for higher ed

Question 3

Answer the question on the basis of the following demand schedule.   The price elasticity of demand is unity

Accepted Answer

A) throughout the entire price range, because the slope of the demand curve is constant. 
B) in the $4-$3 price range only. 
C) over the entire $3-$1 price range. 
D) over the entire $6-$4 price range. 
A) throughout the entire price range, because the slope of the demand curve is constant. 
B) in the $4-$3 price range only. 
C) over the entire $3-$1 price range. 
D) over the entire $6-$4 price range.

Question 4

If a firm can sell1,000 units of product A at $8 per unit and1,200 at $6, then

Accepted Answer

A) the price elasticity of demand is approximately 1.57. 
B) A is a complementary good. 
C) the price elasticity of demand is approximately 0.64. 
D) A is an inferior good. 
A) the price elasticity of demand is approximately 1.57. 
B) A is a complementary good. 
C) the price elasticity of demand is approximately 0.64. 
D) A is an inferior good.

Question 5

A price increase from $25 to $32 results in an increase in quantity supplied from 830 units to 940 units. The price elasticity of supply in this price range is

Accepted Answer

A) 1.61. 
B) 0.5. 
C) 1.98. 
D) 0.62. 
A) 1.61. 
B) 0.5. 
C) 1.98. 
D) 0.62.

Question 6

If the demand for wheat is highly price inelastic, an extraordinarily large crop may reduce farm incomes.

Accepted Answer

A) True 
 B)False

Question 7

The diagram concerns supply adjustments to an increase in demand (D₁ to D₂)in the immediate market period, the short run, and the long run. In the long run, the increase in demand will

Accepted Answer

A) have no effect on either equilibrium price or quantity. 
B) increase equilibrium price but not equilibrium quantity. 
C) increase equilibrium quantity but not equilibrium price. 
D) increase both equilibrium price and quantity. 
A) have no effect on either equilibrium price or quantity. 
B) increase equilibrium price but not equilibrium quantity. 
C) increase equilibrium quantity but not equilibrium price. 
D) increase both equilibrium price and quantity.

Question 8

Answer the question on the basis of the following demand schedule.   If this demand schedule were graphed, we would find that

Accepted Answer

A) its slope diminishes as we move southeast down the curve. 
B) its slope diminishes as we move northwest up the curve. 
C) its slope is constant throughout. 
D) the data are inconsistent with the law of demand. 
A) its slope diminishes as we move southeast down the curve. 
B) its slope diminishes as we move northwest up the curve. 
C) its slope is constant throughout. 
D) the data are inconsistent with the law of demand.

Question 9

You are the only seller of eggs in town, and the price-elasticity coefficient for eggs is known to be 0.8. If you want to increase your sales quantity by 10 percent through a price change, what should you do to the price?

Accepted Answer

A) reduce price by 12.5 percent 
B) increase price by 12.5 percent 
C) reduce price by 8 percent 
D) increase price by 8 percent 
A) reduce price by 12.5 percent 
B) increase price by 12.5 percent 
C) reduce price by 8 percent 
D) increase price by 8 percent

Question 10

The supply of product X is perfectly inelastic if the price of X rises by

Accepted Answer

A) 5 percent and quantity supplied rises by 7 percent. 
B) 8 percent and quantity supplied rises by 8 percent. 
C) 10 percent and quantity supplied stays the same. 
D) 7 percent and quantity supplied rises by 5 percent. 
A) 5 percent and quantity supplied rises by 7 percent. 
B) 8 percent and quantity supplied rises by 8 percent. 
C) 10 percent and quantity supplied stays the same. 
D) 7 percent and quantity supplied rises by 5 percent.

Question 11

If the price elasticity of demand for a product is 2.5, then a price cut from$2.00 to$1.80 will

Accepted Answer

A) increase the quantity demanded by about 2.5 percent. 
B) decrease the quantity demanded by about 2.5 percent. 
C) increase the quantity demanded by about 25 percent. 
D) increase the quantity demanded by about 250 percent. 
A) increase the quantity demanded by about 2.5 percent. 
B) decrease the quantity demanded by about 2.5 percent. 
C) increase the quantity demanded by about 25 percent. 
D) increase the quantity demanded by about 250 percent.

Question 12

Refer to the above graphs. Which graph shows the immediate market period for supply?

Accepted Answer

A) graph A 
B) graph B 
C) graph C 
D) graph D 
A) graph A 
B) graph B 
C) graph C 
D) graph D

Question 13

Which of the following statements is true about the history of Southwest Airlines entering new markets?

Accepted Answer

A) Southwest's entry caused the demand for each carrier to become more inelastic as customers increased their loyalty to particular airlines. 
B) Southwest's entry into new markets had little impact on either the markets or airlines already serving those markets. 
C) Southwest's low price strategy tapped into existing elastic demand in the market, increasing the airline's revenue. 
D) Southwest's highly inelastic supply made it difficult for them to take advantage of demand in the market. 
A) Southwest's entry caused the demand for each carrier to become more inelastic as customers increased their loyalty to particular airlines. 
B) Southwest's entry into new markets had little impact on either the markets or airlines already serving those markets. 
C) Southwest's low price strategy tapped into existing elastic demand in the market, increasing the airline's revenue. 
D) Southwest's highly inelastic supply made it difficult for them to take advantage of demand in the market.

Question 14

What is the most likely effect of the development of rental movies and online movie streaming on the movie theater (or cinema)industry?

Accepted Answer

A) decreased costs of producing movies 
B) increased demand for movie theater tickets 
C) movie theater tickets become an inferior good 
D) increased price elasticity of demand for movie theater tickets 
A) decreased costs of producing movies 
B) increased demand for movie theater tickets 
C) movie theater tickets become an inferior good 
D) increased price elasticity of demand for movie theater tickets

Question 15

If in the short run the demand for mass transit is inelastic and in the long run the demand is elastic, then a price

Accepted Answer

A) increase will decrease total revenue in the short run but increase total revenue in the long run. 
B) increase will increase total revenue in the short run but decrease total revenue in the long run. 
C) decrease will increase total revenue in the short run but decrease total revenue in the long run. 
D) decrease will decrease total revenue in the short run and decrease total revenue in the long run. 
A) increase will decrease total revenue in the short run but increase total revenue in the long run. 
B) increase will increase total revenue in the short run but decrease total revenue in the long run. 
C) decrease will increase total revenue in the short run but decrease total revenue in the long run. 
D) decrease will decrease total revenue in the short run and decrease total revenue in the long run.

Question 16

Consider the demand curve above. If the price is OA, then the total revenues of sellers would be the area

Accepted Answer

A) DABE. 
B) 0ABC. 
C) 0DEF. 
D) CBEF. 
A) DABE. 
B) 0ABC. 
C) 0DEF. 
D) CBEF.

Question 17

Suppose that as the price of Y falls from$3.00 to $2.80, the quantity of Y demanded increases from200 to 210. Then the absolute value of the price elasticity (using the midpoint formula)is approximately

Accepted Answer

A) 0.6. 
B) 1.41. 
C) 0.71. 
D) 1.5. 
A) 0.6. 
B) 1.41. 
C) 0.71. 
D) 1.5.

Question 18

Suppose we find that the price elasticity of demand for a product is 3.5 when its price is increased by 2 percent. We can conclude that quantity demanded

Accepted Answer

A) increased by 7 percent. 
B) decreased by 7 percent. 
C) decreased by 9 percent. 
D) decreased by 1.75 percent. 
A) increased by 7 percent. 
B) decreased by 7 percent. 
C) decreased by 9 percent. 
D) decreased by 1.75 percent.

Question 19

In the figure above, if the equilibrium price of the product increased from $5 to the present price of $6 due to a supply shift, then total revenue would have

Accepted Answer

A) increased by $300. 
B) decreased by $100. 
C) decreased by $300. 
D) stayed the same. 
A) increased by $300. 
B) decreased by $100. 
C) decreased by $300. 
D) stayed the same.

Question 20

If the demand for a product is elastic, then

Accepted Answer

A) a higher tax on the product will generate more tax revenue. 
B) a higher tax on the product will generate less tax revenue. 
C) total revenue will decrease as price decreases. 
D) total revenue will remain constant as price increases. 
A) a higher tax on the product will generate more tax revenue. 
B) a higher tax on the product will generate less tax revenue. 
C) total revenue will decrease as price decreases. 
D) total revenue will remain constant as price increases.

Exam 6: Elasticity

Answer the question based on the following table, which shows a demand schedule. At a price of $3, the total revenues of sellers will be

Explain how colleges and universities charge students differently based on price elasticity of demand.

Answer the question on the basis of the following demand schedule. The price elasticity of demand is unity

If a firm can sell1,000 units of product A at $8 per unit and1,200 at $6, then

A price increase from $25 to $32 results in an increase in quantity supplied from 830 units to 940 units. The price elasticity of supply in this price range is

If the demand for wheat is highly price inelastic, an extraordinarily large crop may reduce farm incomes.

The diagram concerns supply adjustments to an increase in demand (D₁ to D₂)in the immediate market period, the short run, and the long run. In the long run, the increase in demand will

Answer the question on the basis of the following demand schedule. If this demand schedule were graphed, we would find that

You are the only seller of eggs in town, and the price-elasticity coefficient for eggs is known to be 0.8. If you want to increase your sales quantity by 10 percent through a price change, what should you do to the price?

The supply of product X is perfectly inelastic if the price of X rises by

If the price elasticity of demand for a product is 2.5, then a price cut from$2.00 to$1.80 will

Refer to the above graphs. Which graph shows the immediate market period for supply?

Which of the following statements is true about the history of Southwest Airlines entering new markets?

What is the most likely effect of the development of rental movies and online movie streaming on the movie theater (or cinema)industry?

If in the short run the demand for mass transit is inelastic and in the long run the demand is elastic, then a price

Consider the demand curve above. If the price is OA, then the total revenues of sellers would be the area

Suppose that as the price of Y falls from$3.00 to $2.80, the quantity of Y demanded increases from200 to 210. Then the absolute value of the price elasticity (using the midpoint formula)is approximately

Suppose we find that the price elasticity of demand for a product is 3.5 when its price is increased by 2 percent. We can conclude that quantity demanded

In the figure above, if the equilibrium price of the product increased from $5 to the present price of $6 due to a supply shift, then total revenue would have

If the demand for a product is elastic, then

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