Question 1

Table 5-4
  
-Refer to Table 5-4.Demand is unit elastic when quantity demanded changes from

Accepted Answer

A)  10 to 9. 
B)  9 to 8. 
C)  8 to 7. 
D)  There is not enough information given to determine the correct answer. 
A)  10 to 9. 
B)  9 to 8. 
C)  8 to 7. 
D)  There is not enough information given to determine the correct answer.

Question 2

As price elasticity of supply increases,the supply curve

Accepted Answer

A)  becomes flatter. 
B)  becomes steeper. 
C)  becomes downward sloping. 
D)  shifts to the right. 
A)  becomes flatter. 
B)  becomes steeper. 
C)  becomes downward sloping. 
D)  shifts to the right.

Question 3

Table 5-5
  
-Refer to Table 5-5.Which of the three supply curves represents the most elastic supply?

Accepted Answer

A)  supply curve A 
B)  supply curve B 
C)  supply curve C 
D)  There is no difference in the elasticity of the three supply curves. 
A)  supply curve A 
B)  supply curve B 
C)  supply curve C 
D)  There is no difference in the elasticity of the three supply curves.

Question 4

Get Smart University is contemplating an increase in tuition to enhance revenue.If GSU feels that raising tuition would enhance revenue,it is

Accepted Answer

A)  ignoring the law of demand. 
B)  assuming that the demand for university education is elastic. 
C)  assuming that the demand for university education is inelastic. 
D)  assuming that the supply of university education is elastic. 
A)  ignoring the law of demand. 
B)  assuming that the demand for university education is elastic. 
C)  assuming that the demand for university education is inelastic. 
D)  assuming that the supply of university education is elastic.

Question 5

Danita rescues dogs from her local animal shelter.When Danita's income rises by 7 percent,her quantity demanded of dog biscuits increases by 12 percent.For Danita,the income elasticity of demand for dog biscuits is

Accepted Answer

A)  negative, and dog biscuits are a normal good. 
B)  negative, and dog biscuits are an inferior good. 
C)  positive, and dog biscuits are an inferior good. 
D)  positive, and dog biscuits are a normal good. 
A)  negative, and dog biscuits are a normal good. 
B)  negative, and dog biscuits are an inferior good. 
C)  positive, and dog biscuits are an inferior good. 
D)  positive, and dog biscuits are a normal good.

Question 6

If we observe that when the price of chocolate increases by 10%,total revenue increases by 10%,then the demand for chocolate is unit price elastic.

Accepted Answer

A) True 
 B)False

Question 7

Suppose the price elasticity of supply for candles is 0.3 in the short run and 1.2 in the long run.If an increase in the demand for candles causes the price of candles to increase by 36%,then the quantity supplied of candles will increase by about

Accepted Answer

A)  0.8% in the short run and 3.3% in the long run. 
B)  1.2% in the short run and 0.3% in the long run. 
C)  10.8% in the short run and 43.2% in the long run. 
D)  120% in the short run and 30% in the long run. 
A)  0.8% in the short run and 3.3% in the long run. 
B)  1.2% in the short run and 0.3% in the long run. 
C)  10.8% in the short run and 43.2% in the long run. 
D)  120% in the short run and 30% in the long run.

Question 8

If a 15% change in price results in a 20% change in quantity supplied,then the price elasticity of supply is about

Accepted Answer

A)  1.33, and supply is elastic. 
B)  1.33, and supply is inelastic. 
C)  0.75, and supply is elastic. 
D)  0.75, and supply is inelastic. 
A)  1.33, and supply is elastic. 
B)  1.33, and supply is inelastic. 
C)  0.75, and supply is elastic. 
D)  0.75, and supply is inelastic.

Question 9

A drug interdiction program that successfully reduces the supply of illegal drugs in the United States likely will

Accepted Answer

A)  raise the price, reduce the quantity, decrease total revenues, and decrease crime. 
B)  lower the price, increase the quantity, increase total revenues, and increase crime. 
C)  raise the price, increase the quantity, decrease total revenues, and increase crime. 
D)  raise the price, reduce the quantity, increase total revenues, and increase crime. 
A)  raise the price, reduce the quantity, decrease total revenues, and decrease crime. 
B)  lower the price, increase the quantity, increase total revenues, and increase crime. 
C)  raise the price, increase the quantity, decrease total revenues, and increase crime. 
D)  raise the price, reduce the quantity, increase total revenues, and increase crime.

Question 10

Table 5-2
  
-Refer to Table 5-2.Using the midpoint method,if the price falls from $60 to $40,the price elasticity of demand is

Accepted Answer

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

Question 11

The flatter the demand curve that passes through a given point,the more inelastic the demand.

Accepted Answer

A) True 
 B)False

Question 12

If the quantity supplied is the same regardless of price,then supply is

Accepted Answer

A)  elastic. 
B)  perfectly elastic. 
C)  perfectly inelastic. 
D)  inelastic. 
A)  elastic. 
B)  perfectly elastic. 
C)  perfectly inelastic. 
D)  inelastic.

Question 13

A linear,downward-sloping demand curve has a constant elasticity but a changing slope.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following could be the price elasticity of demand for a good for which an increase in price would increase revenue?

Accepted Answer

A)  0.2 
B)  1 
C)  1.5 
D)  All of the above could be correct. 
A)  0.2 
B)  1 
C)  1.5 
D)  All of the above could be correct.

Question 15

Demand is elastic if the price elasticity of demand is

Accepted Answer

A)  less than 1. 
B)  equal to 1. 
C)  equal to 0. 
D)  greater than 1. 
A)  less than 1. 
B)  equal to 1. 
C)  equal to 0. 
D)  greater than 1.

Question 16

Suppose that when the price of good X falls from $10 to $8,the quantity demanded of good Y rises from 20 units to 25 units.Using the midpoint method,the cross-price elasticity of demand is

Accepted Answer

A)  -1.0, and X and Y are complements. 
B)  -1.0, and X and Y are substitutes. 
C)  1.0, and X and Y are complements. 
D)  1.0, and X and Y are substitutes. 
A)  -1.0, and X and Y are complements. 
B)  -1.0, and X and Y are substitutes. 
C)  1.0, and X and Y are complements. 
D)  1.0, and X and Y are substitutes.

Question 17

The price elasticity of supply measures how responsive

Accepted Answer

A)  equilibrium price is to equilibrium quantity. 
B)  sellers are to a change in buyers' income. 
C)  sellers are to a change in price. 
D)  consumers are to the number of substitutes. 
A)  equilibrium price is to equilibrium quantity. 
B)  sellers are to a change in buyers' income. 
C)  sellers are to a change in price. 
D)  consumers are to the number of substitutes.

Question 18

A decrease in supply will cause the smallest increase in price when

Accepted Answer

A)  both supply and demand are inelastic. 
B)  demand is elastic and supply is inelastic. 
C)  both supply and demand are elastic. 
D)  demand is inelastic and supply is elastic. 
A)  both supply and demand are inelastic. 
B)  demand is elastic and supply is inelastic. 
C)  both supply and demand are elastic. 
D)  demand is inelastic and supply is elastic.

Question 19

Drug interdiction,which reduces the supply of drugs,will likely be a less effective policy than educating consumers to reduce their demand for drugs because the drug interdiction policy will lower drug prices and reduce the quantity of drugs demanded.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following could be the price elasticity of demand for a good for which a decrease in price would decrease revenue?

Accepted Answer

A)  0.5 
B)  1 
C)  1.5 
D)  All of the above could be correct. 
A)  0.5 
B)  1 
C)  1.5 
D)  All of the above could be correct.

Exam 5: Elasticity and Its Application

Table 5-4 -Refer to Table 5-4.Demand is unit elastic when quantity demanded changes from

As price elasticity of supply increases,the supply curve

Table 5-5 -Refer to Table 5-5.Which of the three supply curves represents the most elastic supply?

Get Smart University is contemplating an increase in tuition to enhance revenue.If GSU feels that raising tuition would enhance revenue,it is

Danita rescues dogs from her local animal shelter.When Danita's income rises by 7 percent,her quantity demanded of dog biscuits increases by 12 percent.For Danita,the income elasticity of demand for dog biscuits is

If we observe that when the price of chocolate increases by 10%,total revenue increases by 10%,then the demand for chocolate is unit price elastic.

Suppose the price elasticity of supply for candles is 0.3 in the short run and 1.2 in the long run.If an increase in the demand for candles causes the price of candles to increase by 36%,then the quantity supplied of candles will increase by about

If a 15% change in price results in a 20% change in quantity supplied,then the price elasticity of supply is about

A drug interdiction program that successfully reduces the supply of illegal drugs in the United States likely will

Table 5-2 -Refer to Table 5-2.Using the midpoint method,if the price falls from $60 to $40,the price elasticity of demand is

The flatter the demand curve that passes through a given point,the more inelastic the demand.

If the quantity supplied is the same regardless of price,then supply is

A linear,downward-sloping demand curve has a constant elasticity but a changing slope.

Which of the following could be the price elasticity of demand for a good for which an increase in price would increase revenue?

Demand is elastic if the price elasticity of demand is

Suppose that when the price of good X falls from $10 to $8,the quantity demanded of good Y rises from 20 units to 25 units.Using the midpoint method,the cross-price elasticity of demand is

The price elasticity of supply measures how responsive

A decrease in supply will cause the smallest increase in price when

Drug interdiction,which reduces the supply of drugs,will likely be a less effective policy than educating consumers to reduce their demand for drugs because the drug interdiction policy will lower drug prices and reduce the quantity of drugs demanded.

Which of the following could be the price elasticity of demand for a good for which a decrease in price would decrease revenue?

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