Question 1

When a supply curve is relatively flat,the

Accepted Answer

A)  sellers are not at all responsive to a change in price. 
B)  equilibrium price changes substantially when the demand for the good changes. 
C)  supply is relatively elastic. 
D)  supply is relatively inelastic. 
A)  sellers are not at all responsive to a change in price. 
B)  equilibrium price changes substantially when the demand for the good changes. 
C)  supply is relatively elastic. 
D)  supply is relatively inelastic.

Question 2

If the price of gasoline rises,when is the price elasticity of demand likely to be the highest?

Accepted Answer

A)  immediately after the price increases 
B)  one month after the price increase 
C)  three months after the price increase 
D)  one year after the price increase 
A)  immediately after the price increases 
B)  one month after the price increase 
C)  three months after the price increase 
D)  one year after the price increase

Question 3

Charles purchases 20 basketball tickets per year when his annual income is $50,000 and 25 basketball tickets when his annual income is $60,000.Charles's income elasticity of demand for basketball ticket is

Accepted Answer

A)  0.82, and basketball tickets are a normal good. 
B)  0.82, and basketball tickets are an inferior good. 
C)  1.22, and basketball tickets are a normal good. 
D)  1.22, and basketball tickets are an inferior good. 
A)  0.82, and basketball tickets are a normal good. 
B)  0.82, and basketball tickets are an inferior good. 
C)  1.22, and basketball tickets are a normal good. 
D)  1.22, and basketball tickets are an inferior good.

Question 4

The price elasticity of supply measures how responsive

Accepted Answer

A)  sellers are to a change in price. 
B)  sellers are to a change in buyers' income. 
C)  buyers are to a change in production costs. 
D)  equilibrium price is to a change in supply. 
A)  sellers are to a change in price. 
B)  sellers are to a change in buyers' income. 
C)  buyers are to a change in production costs. 
D)  equilibrium price is to a change in supply.

Question 5

Figure 5-4
  
-Refer to Figure 5-4.Assume the section of the demand curve from A to B corresponds to prices between $6 and $12.Then,when the price increases from $8 to $10,

Accepted Answer

A)  the percent decrease in the quantity demanded exceeds the percent increase in the price. 
B)  the percent increase in the price exceeds the percent decrease in the quantity demanded. 
C)  sellers' total revenue increases as a result. 
D)  it is possible that the quantity demanded fell from 550 to 500 as a result. 
A)  the percent decrease in the quantity demanded exceeds the percent increase in the price. 
B)  the percent increase in the price exceeds the percent decrease in the quantity demanded. 
C)  sellers' total revenue increases as a result. 
D)  it is possible that the quantity demanded fell from 550 to 500 as a result.

Question 6

Table 5-5
The following table shows a portion of the demand schedule for a particular good at various levels of income.
  
-Refer to Table 5-5.Using the midpoint method,at a price of $16,what is the income elasticity of demand when income rises from $5,000 to $10,000?

Accepted Answer

A)  0.00 
B)  0.50 
C)  1.00 
D)  1.50 
A)  0.00 
B)  0.50 
C)  1.00 
D)  1.50

Question 7

Figure 5-9
  
-Refer to Figure 5-9.A decrease in price from $15 to $10 leads to a

Accepted Answer

A)  decrease in total revenue of $10, so the price elasticity of demand is greater than 1 in this price range. 
B)  decrease in total revenue of $10, so the price elasticity of demand is less than 1 in this price range. 
C)  decrease in total revenue of $20, so the price elasticity of demand is less than 1 in this price range. 
D)  decrease in total revenue of $20, so demand is elastic in this price range. 
A)  decrease in total revenue of $10, so the price elasticity of demand is greater than 1 in this price range. 
B)  decrease in total revenue of $10, so the price elasticity of demand is less than 1 in this price range. 
C)  decrease in total revenue of $20, so the price elasticity of demand is less than 1 in this price range. 
D)  decrease in total revenue of $20, so demand is elastic in this price range.

Question 8

As the price elasticity of supply approaches infinity,very small changes in price lead to

Accepted Answer

A)  very large changes in quantity supplied. 
B)  very small changes in quantity supplied. 
C)  no change in quantity supplied. 
D)  None of the above is correct. 
A)  very large changes in quantity supplied. 
B)  very small changes in quantity supplied. 
C)  no change in quantity supplied. 
D)  None of the above is correct.

Question 9

Holding all other factors constant and using the midpoint method,if a calculator manufacturer increases production from 40 to 50 units when price increases by 20 percent,then supply is

Accepted Answer

A)  inelastic, since the price elasticity of supply is equal to .91. 
B)  inelastic, since the price elasticity of supply is equal to 1.1. 
C)  elastic, since the price elasticity of supply is equal to 0.91. 
D)  elastic, since the price elasticity of supply is equal to 1.1. 
A)  inelastic, since the price elasticity of supply is equal to .91. 
B)  inelastic, since the price elasticity of supply is equal to 1.1. 
C)  elastic, since the price elasticity of supply is equal to 0.91. 
D)  elastic, since the price elasticity of supply is equal to 1.1.

Question 10

If marijuana were legalized,it is likely that there would be an increase in the supply of marijuana.Advocates of marijuana legalization argue that this would significantly reduce the amount of revenue going to the criminal organizations that currently supply marijuana.These advocates believe that the

Accepted Answer

A)  supply for marijuana is elastic. 
B)  demand for marijuana is elastic. 
C)  supply for marijuana is inelastic. 
D)  demand for marijuana is inelastic. 
A)  supply for marijuana is elastic. 
B)  demand for marijuana is elastic. 
C)  supply for marijuana is inelastic. 
D)  demand for marijuana is inelastic.

Question 11

If the price elasticity of supply is zero,then

Accepted Answer

A)  supply is more elastic than it is in any other case. 
B)  the supply curve is horizontal. 
C)  the quantity supplied is the same, regardless of price. 
D)  a change in demand will cause a relatively small change in the equilibrium price. 
A)  supply is more elastic than it is in any other case. 
B)  the supply curve is horizontal. 
C)  the quantity supplied is the same, regardless of price. 
D)  a change in demand will cause a relatively small change in the equilibrium price.

Question 12

Demand is said to be unit elastic if quantity demanded

Accepted Answer

A)  changes by the same percent as the price. 
B)  changes by a larger percent than the price. 
C)  changes by a smaller percent than the price. 
D)  does not respond to a change in price. 
A)  changes by the same percent as the price. 
B)  changes by a larger percent than the price. 
C)  changes by a smaller percent than the price. 
D)  does not respond to a change in price.

Question 13

If demand is price inelastic,then

Accepted Answer

A)  buyers do not respond much to a change in price. 
B)  buyers respond substantially to a change in price, but the response is very slow. 
C)  buyers do not alter their quantities demanded much in response to advertising, fads, or general changes in tastes. 
D)  the demand curve is very flat. 
A)  buyers do not respond much to a change in price. 
B)  buyers respond substantially to a change in price, but the response is very slow. 
C)  buyers do not alter their quantities demanded much in response to advertising, fads, or general changes in tastes. 
D)  the demand curve is very flat.

Question 14

Tyler purchases 5 pounds of hot dogs per month when his monthly income is $2,000 and 4 pounds of hot dogs per month when his monthly income is $2,200.Tyler's income elasticity of demand for hot dogs is

Accepted Answer

A)  2.33, and hot dogs are a normal good. 
B)  -2.33, and hot dogs are an inferior good. 
C)  0.43, and hot dogs are a normal good. 
D)  -0.43, and hot dogs are an inferior good. 
A)  2.33, and hot dogs are a normal good. 
B)  -2.33, and hot dogs are an inferior good. 
C)  0.43, and hot dogs are a normal good. 
D)  -0.43, and hot dogs are an inferior good.

Question 15

In general,demand curves for necessities tend to be price elastic.

Accepted Answer

A) True 
 B)False

Question 16

Farm programs that pay farmers not to plant crops on all their land

Accepted Answer

A)  hurt farmers by lowering their total revenue and hurt consumers by causing shortages of some food items. 
B)  help farmers by cutting costs, which helps consumers by lowering food prices. 
C)  help farmers by increasing total revenue in the market but hurt consumers by raising food prices. 
D)  help farmers directly since they receive government payments but have no real effects on consumers. 
A)  hurt farmers by lowering their total revenue and hurt consumers by causing shortages of some food items. 
B)  help farmers by cutting costs, which helps consumers by lowering food prices. 
C)  help farmers by increasing total revenue in the market but hurt consumers by raising food prices. 
D)  help farmers directly since they receive government payments but have no real effects on consumers.

Question 17

Figure 5-12
  
-Refer to Figure 5-12.If rectangle D is larger than rectangle A,then

Accepted Answer

A)  demand is elastic between prices P1 and P2. 
B)  a decrease in price from P2 to P1 will cause an increase in total revenue. 
C)  the magnitude of the percent change in price between P1 and P2 is smaller than the magnitude of the corresponding percent change in quantity demanded. 
D)  All of the above are correct. 
A)  demand is elastic between prices P1 and P2. 
B)  a decrease in price from P2 to P1 will cause an increase in total revenue. 
C)  the magnitude of the percent change in price between P1 and P2 is smaller than the magnitude of the corresponding percent change in quantity demanded. 
D)  All of the above are correct.

Question 18

A linear,upward-sloping supply curve has

Accepted Answer

A)  a constant slope and a changing price elasticity of supply. 
B)  a changing slope and a constant price elasticity of supply. 
C)  both a constant slope and a constant price elasticity of supply. 
D)  both a changing slope and a changing price elasticity of supply. 
A)  a constant slope and a changing price elasticity of supply. 
B)  a changing slope and a constant price elasticity of supply. 
C)  both a constant slope and a constant price elasticity of supply. 
D)  both a changing slope and a changing price elasticity of supply.

Question 19

Other things equal,the demand for a good tends to be more inelastic,the

Accepted Answer

A)  fewer the available substitutes. 
B)  longer the time period considered. 
C)  more the good is considered a luxury good. 
D)  more narrowly defined is the market for the good. 
A)  fewer the available substitutes. 
B)  longer the time period considered. 
C)  more the good is considered a luxury good. 
D)  more narrowly defined is the market for the good.

Question 20

If the price elasticity of demand is equal to 1,then demand is unit elastic.

Accepted Answer

A) True 
 B)False

Exam 5: Elasticity and Its Application

When a supply curve is relatively flat,the

If the price of gasoline rises,when is the price elasticity of demand likely to be the highest?

Charles purchases 20 basketball tickets per year when his annual income is $50,000 and 25 basketball tickets when his annual income is $60,000.Charles's income elasticity of demand for basketball ticket is

The price elasticity of supply measures how responsive

Figure 5-4 -Refer to Figure 5-4.Assume the section of the demand curve from A to B corresponds to prices between $6 and $12.Then,when the price increases from $8 to $10,

Table 5-5 The following table shows a portion of the demand schedule for a particular good at various levels of income. -Refer to Table 5-5.Using the midpoint method,at a price of $16,what is the income elasticity of demand when income rises from $5,000 to $10,000?

Figure 5-9 -Refer to Figure 5-9.A decrease in price from $15 to $10 leads to a

As the price elasticity of supply approaches infinity,very small changes in price lead to

Holding all other factors constant and using the midpoint method,if a calculator manufacturer increases production from 40 to 50 units when price increases by 20 percent,then supply is

If the price elasticity of supply is zero,then

Demand is said to be unit elastic if quantity demanded

If demand is price inelastic,then

Tyler purchases 5 pounds of hot dogs per month when his monthly income is $2,000 and 4 pounds of hot dogs per month when his monthly income is $2,200.Tyler's income elasticity of demand for hot dogs is

In general,demand curves for necessities tend to be price elastic.

Farm programs that pay farmers not to plant crops on all their land

Figure 5-12 -Refer to Figure 5-12.If rectangle D is larger than rectangle A,then

A linear,upward-sloping supply curve has

Other things equal,the demand for a good tends to be more inelastic,the

If the price elasticity of demand is equal to 1,then demand is unit elastic.

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