Question 1

Figure 5-4
  
-Refer to Figure 5-4.If the price increases in the region of the demand curve between points A and B,we can expect total revenue to

Accepted Answer

A)  increase. 
B)  stay the same. 
C)  decrease. 
D)  first increase, then decrease until total revenue is maximized. 
A)  increase. 
B)  stay the same. 
C)  decrease. 
D)  first increase, then decrease until total revenue is maximized.

Question 2

Assume that a 4 percent increase in income results in a 2 percent increase in the quantity demanded of a good.The income elasticity of demand for the good is

Accepted Answer

A)  negative, and the good is an inferior good. 
B)  negative, and the good is a normal good. 
C)  positive, and the good is a normal good. 
D)  positive, and the good is an inferior good. 
A)  negative, and the good is an inferior good. 
B)  negative, and the good is a normal good. 
C)  positive, and the good is a normal good. 
D)  positive, and the good is an inferior good.

Question 3

Figure 5-4
  
-Refer to Figure 5-4.The section of the demand curve from A to B represents the

Accepted Answer

A)  elastic section of the demand curve. 
B)  inelastic section of the demand curve. 
C)  unit elastic section of the demand curve. 
D)  perfectly elastic section of the demand curve. 
A)  elastic section of the demand curve. 
B)  inelastic section of the demand curve. 
C)  unit elastic section of the demand curve. 
D)  perfectly elastic section of the demand curve.

Question 4

Figure 5-3
  
-Refer to Figure 5-3.Which demand curve is unit elastic?

Accepted Answer

A)  A 
B)  B 
C)  D 
D)  None of the above. 
A)  A 
B)  B 
C)  D 
D)  None of the above.

Question 5

Figure 5-5
  
-Refer to Figure 5-5.Using the midpoint method,between prices of $12 and $18,price elasticity of demand is

Accepted Answer

A)  0.33. 
B)  0.67. 
C)  1.33. 
D)  1.89. 
A)  0.33. 
B)  0.67. 
C)  1.33. 
D)  1.89.

Question 6

Figure 5-5
  
-Refer to Figure 5-5.At a price of $30 per unit,sellers' total revenue equals

Accepted Answer

A)  $150. 
B)  $200. 
C)  $288. 
D)  $450. 
A)  $150. 
B)  $200. 
C)  $288. 
D)  $450.

Question 7

If the price elasticity of supply is 2 and the quantity supplied decreases by 6%,then the price must have decreased by 3%.

Accepted Answer

A) True 
 B)False

Question 8

Between 1950 and today there was a

Accepted Answer

A)  20 percent drop in the number of farmers, but farm output more than tripled. 
B)  30 percent drop in the number of farmers, but farm output more than tripled. 
C)  50 percent drop in the number of farmers, but farm output more than doubled. 
D)  70 percent drop in the number of farmers, but farm output more than doubled. 
A)  20 percent drop in the number of farmers, but farm output more than tripled. 
B)  30 percent drop in the number of farmers, but farm output more than tripled. 
C)  50 percent drop in the number of farmers, but farm output more than doubled. 
D)  70 percent drop in the number of farmers, but farm output more than doubled.

Question 9

Suppose you are in charge of setting prices at a local sandwich shop.The business needs to increase its total revenue,and your job is on the line.If the demand for sandwiches is elastic,you

Accepted Answer

A)  should increase the price of sandwiches. 
B)  should decrease the price of sandwiches. 
C)  should not change the price of sandwiches. 
D)  could not determine what to do with price until you determine whether supply is elastic or inelastic. 
A)  should increase the price of sandwiches. 
B)  should decrease the price of sandwiches. 
C)  should not change the price of sandwiches. 
D)  could not determine what to do with price until you determine whether supply is elastic or inelastic.

Question 10

At price of $1.25,a paper manufacturer is willing to supply 150 spiral notebooks per day.At a price of $1.50,the paper manufacturer is willing to supply 175 spiral notebooks per day.Using the midpoint method,the price elasticity of supply is about

Accepted Answer

A)  1.18. 
B)  1.00. 
C)  0.85. 
D)  0.25. 
A)  1.18. 
B)  1.00. 
C)  0.85. 
D)  0.25.

Question 11

Figure 5-4
  
-Refer to Figure 5-4.Assume,for the good in question,two specific points on the demand curve are (Q = 1,000,P = $40)and (Q = 1,500,P = $30).Then which of the following scenarios is possible?

Accepted Answer

A)  Both of these points lie on the section of the demand curve from B to C. 
B)  The vertical intercept of the demand curve is the point (Q = 0, P = $60). 
C)  The horizontal intercept of the demand curve is the point (Q = 1,800, P = $0). 
D)  Any of these scenarios is possible. 
A)  Both of these points lie on the section of the demand curve from B to C. 
B)  The vertical intercept of the demand curve is the point (Q = 0, P = $60). 
C)  The horizontal intercept of the demand curve is the point (Q = 1,800, P = $0). 
D)  Any of these scenarios is possible.

Question 12

You and your college roommate eat three packages of Ramen noodles each week.After graduation last month,both of you were hired at several times your college income.Your roommate still enjoys Ramen noodles very much and buys even more,but you plan to buy fewer Ramen noodles in favor of foods you prefer more.When looking at income elasticity of demand for Ramen noodles,yours would

Accepted Answer

A)  be negative and your roommate's would be positive. 
B)  be positive and your roommate's would be negative. 
C)  be zero and your roommate's would approach infinity. 
D)  approach infinity and your roommate's would be zero. 
A)  be negative and your roommate's would be positive. 
B)  be positive and your roommate's would be negative. 
C)  be zero and your roommate's would approach infinity. 
D)  approach infinity and your roommate's would be zero.

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

If the quantity demanded of a certain good responds only slightly to a change in the price of the good,then the

Accepted Answer

A)  demand for the good is said to be elastic. 
B)  demand for the good is said to be inelastic. 
C)  law of demand does not apply to the good. 
D)  demand curve for the good shifts only slightly in response to a change in price. 
A)  demand for the good is said to be elastic. 
B)  demand for the good is said to be inelastic. 
C)  law of demand does not apply to the good. 
D)  demand curve for the good shifts only slightly in response to a change in price.

Question 15

Using the midpoint method,compute the elasticity of demand between points A and B.Is demand along this portion of the curve elastic or inelastic? Interpret your answer with regard to price and quantity demanded.Now compute the elasticity of demand between points B and C.Is demand along this portion of the curve elastic or inelastic?

Accepted Answer

In the section of the demand curve from

Question 16

For which pairs of goods is the cross-price elasticity most likely to be negative?

Accepted Answer

A)  peanut butter and jelly 
B)  automobile tires and coffee 
C)  pens and pencils 
D)  paperback novels and electronic books for e-readers 
A)  peanut butter and jelly 
B)  automobile tires and coffee 
C)  pens and pencils 
D)  paperback novels and electronic books for e-readers

Question 17

Supply tends to be more elastic in the short run and more inelastic in the long run.

Accepted Answer

A) True 
 B)False

Question 18

Reta's income elasticity of demand for steak dinners is 1.50.All else equal,this means that if her income increases by 20 percent,she will buy

Accepted Answer

A)  150 percent more steak dinners. 
B)  50 percent more steak dinners. 
C)  30 percent more steak dinners. 
D)  20 percent more steak dinners. 
A)  150 percent more steak dinners. 
B)  50 percent more steak dinners. 
C)  30 percent more steak dinners. 
D)  20 percent more steak dinners.

Question 19

Figure 5-2
  
-Refer to Figure 5-2.As price falls from Pa to Pb,we could use the three demand curves to calculate three different values of the price elasticity of demand.Which of the three demand curves would produce the smallest elasticity?

Accepted Answer

A)  D1 
B)  D2 
C)  D3 
D)  All of the above are equally elastic. 
A)  D1 
B)  D2 
C)  D3 
D)  All of the above are equally elastic.

Question 20

Which of the following is likely to have the most price inelastic demand?

Accepted Answer

A)  white chocolate chip with macadamia nut cookies 
B)  Mrs. Field's chocolate chip cookies 
C)  milk chocolate chip cookies 
D)  cookies 
A)  white chocolate chip with macadamia nut cookies 
B)  Mrs. Field's chocolate chip cookies 
C)  milk chocolate chip cookies 
D)  cookies

Figure 5-4 -Refer to Figure 5-4.If the price increases in the region of the demand curve between points A and B,we can expect total revenue to

Assume that a 4 percent increase in income results in a 2 percent increase in the quantity demanded of a good.The income elasticity of demand for the good is

Figure 5-4 -Refer to Figure 5-4.The section of the demand curve from A to B represents the

Figure 5-3 -Refer to Figure 5-3.Which demand curve is unit elastic?

Figure 5-5 -Refer to Figure 5-5.Using the midpoint method,between prices of $12 and $18,price elasticity of demand is

Figure 5-5 -Refer to Figure 5-5.At a price of $30 per unit,sellers' total revenue equals

If the price elasticity of supply is 2 and the quantity supplied decreases by 6%,then the price must have decreased by 3%.

Between 1950 and today there was a

Suppose you are in charge of setting prices at a local sandwich shop.The business needs to increase its total revenue,and your job is on the line.If the demand for sandwiches is elastic,you

At price of $1.25,a paper manufacturer is willing to supply 150 spiral notebooks per day.At a price of $1.50,the paper manufacturer is willing to supply 175 spiral notebooks per day.Using the midpoint method,the price elasticity of supply is about

Figure 5-4 -Refer to Figure 5-4.Assume,for the good in question,two specific points on the demand curve are (Q = 1,000,P = $40)and (Q = 1,500,P = $30).Then which of the following scenarios is possible?

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

If the quantity demanded of a certain good responds only slightly to a change in the price of the good,then the

For which pairs of goods is the cross-price elasticity most likely to be negative?

Supply tends to be more elastic in the short run and more inelastic in the long run.

Reta's income elasticity of demand for steak dinners is 1.50.All else equal,this means that if her income increases by 20 percent,she will buy

Figure 5-2 -Refer to Figure 5-2.As price falls from Pa to Pb,we could use the three demand curves to calculate three different values of the price elasticity of demand.Which of the three demand curves would produce the smallest elasticity?

Which of the following is likely to have the most price inelastic demand?

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.

Application: 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 Market For the Factors of Production.

Earnings and Discrimination.

Income Inequality and Poverty.

The Theory of Consumer Choice.

Frontiers in Microeconomics.

Filters

Exam 5: Elasticity and Its Application

Figure 5-4 -Refer to Figure 5-4.If the price increases in the region of the demand curve between points A and B,we can expect total revenue to

Assume that a 4 percent increase in income results in a 2 percent increase in the quantity demanded of a good.The income elasticity of demand for the good is

Figure 5-4 -Refer to Figure 5-4.The section of the demand curve from A to B represents the

Figure 5-3 -Refer to Figure 5-3.Which demand curve is unit elastic?

Figure 5-5 -Refer to Figure 5-5.Using the midpoint method,between prices of $12 and $18,price elasticity of demand is

Figure 5-5 -Refer to Figure 5-5.At a price of $30 per unit,sellers' total revenue equals

If the price elasticity of supply is 2 and the quantity supplied decreases by 6%,then the price must have decreased by 3%.

Between 1950 and today there was a

Suppose you are in charge of setting prices at a local sandwich shop.The business needs to increase its total revenue,and your job is on the line.If the demand for sandwiches is elastic,you

At price of $1.25,a paper manufacturer is willing to supply 150 spiral notebooks per day.At a price of $1.50,the paper manufacturer is willing to supply 175 spiral notebooks per day.Using the midpoint method,the price elasticity of supply is about

Figure 5-4 -Refer to Figure 5-4.Assume,for the good in question,two specific points on the demand curve are (Q = 1,000,P = $40)and (Q = 1,500,P = $30).Then which of the following scenarios is possible?

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

If the quantity demanded of a certain good responds only slightly to a change in the price of the good,then the

For which pairs of goods is the cross-price elasticity most likely to be negative?

Supply tends to be more elastic in the short run and more inelastic in the long run.

Reta's income elasticity of demand for steak dinners is 1.50.All else equal,this means that if her income increases by 20 percent,she will buy

Figure 5-2 -Refer to Figure 5-2.As price falls from Pa to Pb,we could use the three demand curves to calculate three different values of the price elasticity of demand.Which of the three demand curves would produce the smallest elasticity?

Which of the following is likely to have the most price inelastic demand?

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.

Application: 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 Market For the Factors of Production.

Earnings and Discrimination.

Income Inequality and Poverty.

The Theory of Consumer Choice.

Frontiers in Microeconomics.

Filters