Question 1

Good news for farming can be bad news for farmers because the

Accepted Answer

A)  supply curve for an individual farmer is usually perfectly elastic. 
B)  supply curve for an individual farmer is usually perfectly inelastic. 
C)  demand for basic foodstuffs is usually inelastic, meaning that factors that shift supply to the right decrease total revenues to sellers. 
D)  demand for basic foodstuffs is usually elastic, meaning that factors that shift supply to the right increase total revenues to sellers. 
A)  supply curve for an individual farmer is usually perfectly elastic. 
B)  supply curve for an individual farmer is usually perfectly inelastic. 
C)  demand for basic foodstuffs is usually inelastic, meaning that factors that shift supply to the right decrease total revenues to sellers. 
D)  demand for basic foodstuffs is usually elastic, meaning that factors that shift supply to the right increase total revenues to sellers.

Question 2

A city wants to raise revenues to build a new municipal swimming pool next year.The mayor suggests that the city raise the price of admission to the current municipal pools this year to raise revenues.The city manager suggests that the city lower the price of admission to raise revenues.Who is correct?

Accepted Answer

A)  Both the mayor and city manager would be correct if demand were price elastic. 
B)  Both the mayor and city manager would be correct if demand were price inelastic. 
C)  The mayor would be correct if demand were price elastic; the city manager would be correct if demand were price inelastic. 
D)  The mayor would be correct if demand were price inelastic; the city manager would be correct if demand were price elastic. 
A)  Both the mayor and city manager would be correct if demand were price elastic. 
B)  Both the mayor and city manager would be correct if demand were price inelastic. 
C)  The mayor would be correct if demand were price elastic; the city manager would be correct if demand were price inelastic. 
D)  The mayor would be correct if demand were price inelastic; the city manager would be correct if demand were price elastic.

Question 3

When supply is perfectly elastic,the value of the price elasticity of supply is

Accepted Answer

A)  0. 
B)  1. 
C)  greater than 0 and less than 1. 
D)  infinity. 
A)  0. 
B)  1. 
C)  greater than 0 and less than 1. 
D)  infinity.

Question 4

When demand is unit elastic,price elasticity of demand equals

Accepted Answer

A)  1, and total revenue and price move in the same direction. 
B)  1, and total revenue and price move in opposite directions. 
C)  1, and total revenue does not change when price changes. 
D)  0, and total revenue does not change when price changes. 
A)  1, and total revenue and price move in the same direction. 
B)  1, and total revenue and price move in opposite directions. 
C)  1, and total revenue does not change when price changes. 
D)  0, and total revenue does not change when price changes.

Question 5

Moving downward and to the right along a linear demand curve,we know that total revenue

Accepted Answer

A)  first increases, then decreases. 
B)  first decreases, then increases. 
C)  always increases. 
D)  always decreases. 
A)  first increases, then decreases. 
B)  first decreases, then increases. 
C)  always increases. 
D)  always decreases.

Question 6

The production of methamphetamine (meth)is a social problem in the Midwest.Iowa is considering two potential programs: Operation Methbust would increase the number of sheriffs' deputies to search out and destroy methamphetamine labs.Operation Say No to Meth would increase the training required of public school teachers so that they could better educate students about the health risks of using meth.Assuming that each program were successful,which of the following statements is correct?

Accepted Answer

A)  Both Operation Methbust and Say No would reduce the demand for meth. 
B)  Both Operation Methbust and Say No would reduce the supply of meth. 
C)  Operation Methbust would reduce the demand for meth; Operation Say No would reduce the supply of meth. 
D)  Operation Methbust would reduce the supply of meth; Operation Say No would reduce the demand for meth. 
A)  Both Operation Methbust and Say No would reduce the demand for meth. 
B)  Both Operation Methbust and Say No would reduce the supply of meth. 
C)  Operation Methbust would reduce the demand for meth; Operation Say No would reduce the supply of meth. 
D)  Operation Methbust would reduce the supply of meth; Operation Say No would reduce the demand for meth.

Question 7

Holding all other forces constant,if decreasing the price of a good leads to an increase in total revenue,then the demand for the good must be

Accepted Answer

A)  unit elastic. 
B)  inelastic. 
C)  elastic. 
D)  None of the above is correct because a price increase always leads to an increase in total revenue. 
A)  unit elastic. 
B)  inelastic. 
C)  elastic. 
D)  None of the above is correct because a price increase always leads to an increase in total revenue.

Question 8

If the price elasticity of demand for a good is 0.8,then which of the following events is consistent with a 4 percent decrease in the quantity of the good demanded?

Accepted Answer

A)  a 0.2 percent increase in the price of the good 
B)  a 3.2 percent increase in the price of the good 
C)  a 4.8 percent increase in the price of the good 
D)  a 5 percent increase in the price of the good 
A)  a 0.2 percent increase in the price of the good 
B)  a 3.2 percent increase in the price of the good 
C)  a 4.8 percent increase in the price of the good 
D)  a 5 percent increase in the price of the good

Question 9

For which of the following goods is the income elasticity of demand likely lowest?

Accepted Answer

A)  water 
B)  sapphire pendant necklaces 
C)  filet mignon steaks 
D)  fresh fruit 
A)  water 
B)  sapphire pendant necklaces 
C)  filet mignon steaks 
D)  fresh fruit

Question 10

For a good that is a necessity,

Accepted Answer

A)  quantity demanded tends to respond substantially to a change in price. 
B)  demand tends to be inelastic. 
C)  the law of demand does not apply. 
D)  All of the above are correct. 
A)  quantity demanded tends to respond substantially to a change in price. 
B)  demand tends to be inelastic. 
C)  the law of demand does not apply. 
D)  All of the above are correct.

Question 11

Which of the following statements helps to explain why government drug interdiction increases drug-related crime?

Accepted Answer

A)  The direct impact is on buyers, not sellers. 
B)  Successful drug interdiction policies reduce the demand for illegal drugs. 
C)  Drug addicts will have an even greater need for quick cash to support their habits. 
D)  In the short run, both equilibrium quantities and prices will fall in the markets for illegal drugs. 
A)  The direct impact is on buyers, not sellers. 
B)  Successful drug interdiction policies reduce the demand for illegal drugs. 
C)  Drug addicts will have an even greater need for quick cash to support their habits. 
D)  In the short run, both equilibrium quantities and prices will fall in the markets for illegal drugs.

Question 12

Figure 5-11
  
-Refer to Figure 5-11.Using the midpoint method,the price elasticity of demand between point C and point D is about

Accepted Answer

A)  0.29. 
B)  0.54. 
C)  1.86. 
D)  2.0. 
A)  0.29. 
B)  0.54. 
C)  1.86. 
D)  2.0.

Question 13

Because the demand for wheat tends to be inelastic,the development of a new,more productive hybrid wheat would tend to

Accepted Answer

A)  increase the total revenue of wheat farmers. 
B)  decrease the total revenue of wheat farmers. 
C)  decrease the demand for wheat. 
D)  decrease the supply of wheat. 
A)  increase the total revenue of wheat farmers. 
B)  decrease the total revenue of wheat farmers. 
C)  decrease the demand for wheat. 
D)  decrease the supply of wheat.

Question 14

Suppose good X has a negative income elasticity of demand.This implies that good X is

Accepted Answer

A)  a normal good. 
B)  a necessity. 
C)  an inferior good. 
D)  a luxury. 
A)  a normal good. 
B)  a necessity. 
C)  an inferior good. 
D)  a luxury.

Question 15

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

Accepted Answer

A)  gasoline in the short run 
B)  dentist's visits 
C)  ice cream 
D)  deodorant 
A)  gasoline in the short run 
B)  dentist's visits 
C)  ice cream 
D)  deodorant

Question 16

If the price elasticity of demand for a good is 1.5,then a 3 percent decrease in price results in a

Accepted Answer

A)  0.5 percent increase in the quantity demanded. 
B)  2 percent increase in the quantity demanded. 
C)  4.5 percent increase in the quantity demanded. 
D)  5 percent increase in the quantity demanded. 
A)  0.5 percent increase in the quantity demanded. 
B)  2 percent increase in the quantity demanded. 
C)  4.5 percent increase in the quantity demanded. 
D)  5 percent increase in the quantity demanded.

Question 17

When a supply curve is relatively flat,

Accepted Answer

A)  sellers are not very responsive to changes in price. 
B)  supply is relatively inelastic. 
C)  supply is relatively elastic. 
D)  Both a and b are correct. 
A)  sellers are not very responsive to changes in price. 
B)  supply is relatively inelastic. 
C)  supply is relatively elastic. 
D)  Both a and b are correct.

Question 18

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

Accepted Answer

A)  clothing 
B)  blue jeans 
C)  Tommy Hilfiger jeans 
D)  All three would have the same elasticity of demand because they are all related. 
A)  clothing 
B)  blue jeans 
C)  Tommy Hilfiger jeans 
D)  All three would have the same elasticity of demand because they are all related.

Question 19

Drug interdiction,which reduces the supply of drugs,may decrease drug-related crime because the demand for drugs is inelastic.

Accepted Answer

A) True 
 B)False

Question 20

Demand is said to be inelastic if

Accepted Answer

A)  buyers respond substantially to changes in the price of the good. 
B)  demand shifts only slightly when the price of the good changes. 
C)  the quantity demanded changes only slightly when the price of the good changes. 
D)  the price of the good responds only slightly to changes in demand. 
A)  buyers respond substantially to changes in the price of the good. 
B)  demand shifts only slightly when the price of the good changes. 
C)  the quantity demanded changes only slightly when the price of the good changes. 
D)  the price of the good responds only slightly to changes in demand.

Good news for farming can be bad news for farmers because the

When supply is perfectly elastic,the value of the price elasticity of supply is

When demand is unit elastic,price elasticity of demand equals

Moving downward and to the right along a linear demand curve,we know that total revenue

Holding all other forces constant,if decreasing the price of a good leads to an increase in total revenue,then the demand for the good must be

If the price elasticity of demand for a good is 0.8,then which of the following events is consistent with a 4 percent decrease in the quantity of the good demanded?

For which of the following goods is the income elasticity of demand likely lowest?

For a good that is a necessity,

Which of the following statements helps to explain why government drug interdiction increases drug-related crime?

Figure 5-11 -Refer to Figure 5-11.Using the midpoint method,the price elasticity of demand between point C and point D is about

Because the demand for wheat tends to be inelastic,the development of a new,more productive hybrid wheat would tend to

Suppose good X has a negative income elasticity of demand.This implies that good X is

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

If the price elasticity of demand for a good is 1.5,then a 3 percent decrease in price results in a

When a supply curve is relatively flat,

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

Drug interdiction,which reduces the supply of drugs,may decrease drug-related crime because the demand for drugs is inelastic.

Demand is said to be inelastic if

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

Good news for farming can be bad news for farmers because the

When supply is perfectly elastic,the value of the price elasticity of supply is

When demand is unit elastic,price elasticity of demand equals

Moving downward and to the right along a linear demand curve,we know that total revenue

Holding all other forces constant,if decreasing the price of a good leads to an increase in total revenue,then the demand for the good must be

If the price elasticity of demand for a good is 0.8,then which of the following events is consistent with a 4 percent decrease in the quantity of the good demanded?

For which of the following goods is the income elasticity of demand likely lowest?

For a good that is a necessity,

Which of the following statements helps to explain why government drug interdiction increases drug-related crime?

Figure 5-11 -Refer to Figure 5-11.Using the midpoint method,the price elasticity of demand between point C and point D is about

Because the demand for wheat tends to be inelastic,the development of a new,more productive hybrid wheat would tend to

Suppose good X has a negative income elasticity of demand.This implies that good X is

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

If the price elasticity of demand for a good is 1.5,then a 3 percent decrease in price results in a

When a supply curve is relatively flat,

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

Drug interdiction,which reduces the supply of drugs,may decrease drug-related crime because the demand for drugs is inelastic.

Demand is said to be inelastic if

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