Question 1

If the price of calculators increases by 15 percent and the quantity demanded per week falls by 45 percent as a result,then the price elasticity of demand is 3.

Accepted Answer

A) True 
 B)False

Question 2

If the price elasticity of supply for a good is equal to infinity,then the

Accepted Answer

A)  supply curve is vertical. 
B)  supply curve is horizontal. 
C)  supply curve also has a slope equal to infinity. 
D)  quantity supplied is constant regardless of the price. 
A)  supply curve is vertical. 
B)  supply curve is horizontal. 
C)  supply curve also has a slope equal to infinity. 
D)  quantity supplied is constant regardless of the price.

Question 3

Whether a good is a luxury or necessity depends on the

Accepted Answer

A)  price of the good. 
B)  preferences of the buyer. 
C)  intrinsic properties of the good. 
D)  scarcity of the good. 
A)  price of the good. 
B)  preferences of the buyer. 
C)  intrinsic properties of the good. 
D)  scarcity of the good.

Question 4

How does the concept of elasticity allow us to improve upon our understanding of supply and demand?

Accepted Answer

A)  Elasticity allows us to analyze supply and demand with greater precision than would be the case in the absence of the elasticity concept. 
B)  Elasticity provides us with a better rationale for statements such as "an increase in x will lead to a decrease in y" than we would have in the absence of the elasticity concept. 
C)  Without elasticity, we would not be able to address the direction in which price is likely to move in response to a surplus or a shortage. 
D)  Without elasticity, it is very difficult to assess the degree of competition within a market. 
A)  Elasticity allows us to analyze supply and demand with greater precision than would be the case in the absence of the elasticity concept. 
B)  Elasticity provides us with a better rationale for statements such as "an increase in x will lead to a decrease in y" than we would have in the absence of the elasticity concept. 
C)  Without elasticity, we would not be able to address the direction in which price is likely to move in response to a surplus or a shortage. 
D)  Without elasticity, it is very difficult to assess the degree of competition within a market.

Question 5

If we observe that when the price of chocolate increases by 10%,quantity demanded falls by 5%,then the demand for chocolate is price inelastic.

Accepted Answer

A) True 
 B)False

Question 6

Figure 5-12
  
-Refer to Figure 5-12.Total revenue when the price is P₁ is represented by the area(s)

Accepted Answer

A)  B + D. 
B)  A + B. 
C)  C + D. 
D)  D. 
A)  B + D. 
B)  A + B. 
C)  C + D. 
D)  D.

Question 7

Figure 5-16
  
-Refer to Figure 5-16.Using the midpoint method,what is the price elasticity of supply between point B and point C?

Accepted Answer

A)  1.44 
B)  1.29 
C)  0.96 
D)  0.78 
A)  1.44 
B)  1.29 
C)  0.96 
D)  0.78

Question 8

For a horizontal demand curve,

Accepted Answer

A)  the slope is undefined, and the price elasticity of demand is equal to 0. 
B)  the slope is equal to 0, and the price elasticity of demand is undefined. 
C)  both the slope and price elasticity of demand are undefined. 
D)  both the slope and price elasticity of demand are equal to 0. 
A)  the slope is undefined, and the price elasticity of demand is equal to 0. 
B)  the slope is equal to 0, and the price elasticity of demand is undefined. 
C)  both the slope and price elasticity of demand are undefined. 
D)  both the slope and price elasticity of demand are equal to 0.

Question 9

If we observe that when the price of chocolate decreases by 10%,quantity demanded increases by 25%,then the demand for chocolate is price elastic.

Accepted Answer

A) True 
 B)False

Question 10

Elasticity is

Accepted Answer

A)  a measure of how much buyers and sellers respond to changes in market conditions. 
B)  the study of how the allocation of resources affects economic well-being. 
C)  the maximum amount that a buyer will pay for a good. 
D)  the value of everything a seller must give up to produce a good. 
A)  a measure of how much buyers and sellers respond to changes in market conditions. 
B)  the study of how the allocation of resources affects economic well-being. 
C)  the maximum amount that a buyer will pay for a good. 
D)  the value of everything a seller must give up to produce a good.

Question 11

For a particular good,a 10 percent increase in price causes a 3 percent decrease in quantity demanded.Which of the following statements is most likely applicable to this good?

Accepted Answer

A)  The relevant time horizon is short. 
B)  The good is a luxury. 
C)  The market for the good is narrowly defined. 
D)  There are many close substitutes for this good. 
A)  The relevant time horizon is short. 
B)  The good is a luxury. 
C)  The market for the good is narrowly defined. 
D)  There are many close substitutes for this good.

Question 12

Suppose the cross-price elasticity of demand between hot dogs and mustard is -2.00.This implies that a 20 percent increase in the price of hot dogs will cause the quantity of mustard purchased to

Accepted Answer

A)  fall by 200 percent. 
B)  fall by 40 percent. 
C)  rise by 200 percent. 
D)  rise by 40 percent. 
A)  fall by 200 percent. 
B)  fall by 40 percent. 
C)  rise by 200 percent. 
D)  rise by 40 percent.

Question 13

If sellers do not adjust their quantities supplied at all in response to a change in price,

Accepted Answer

A)  advances in technology must be prevalent. 
B)  the time period under consideration must be very long. 
C)  supply is perfectly elastic. 
D)  supply is perfectly inelastic. 
A)  advances in technology must be prevalent. 
B)  the time period under consideration must be very long. 
C)  supply is perfectly elastic. 
D)  supply is perfectly inelastic.

Question 14

Table 5-6
  
-Refer to Table 5-6.Which scenario describes the market for oil in the short run?

Accepted Answer

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

Question 15

Figure 5-14
  
-Refer to Figure 5-14.Using the midpoint method,what is the price elasticity of supply between points A and B?

Accepted Answer

A)  2.33 
B)  1.0 
C)  0.43 
D)  0.1 
A)  2.33 
B)  1.0 
C)  0.43 
D)  0.1

Question 16

Demand for a good is said to be inelastic if the quantity demanded increases slightly when the price falls by a large amount.

Accepted Answer

A) True 
 B)False

Question 17

Figure 5-14
  
-Refer to Figure 5-14.Along which of these segments of the supply curve is supply least elastic?

Accepted Answer

A)  GH 
B)  CD 
C)  AC 
D)  AB 
A)  GH 
B)  CD 
C)  AC 
D)  AB

Question 18

If the price elasticity of demand for a good is 0.25,then a 20 percent decrease in price results in a

Accepted Answer

A)  0.0125 percent increase in the quantity demanded. 
B)  4 percent increase in the quantity demanded. 
C)  5 percent increase in the quantity demanded. 
D)  80 percent increase in the quantity demanded. 
A)  0.0125 percent increase in the quantity demanded. 
B)  4 percent increase in the quantity demanded. 
C)  5 percent increase in the quantity demanded. 
D)  80 percent increase in the quantity demanded.

Question 19

Figure 5-3
  
-Refer to Figure 5-3.Mark says he would buy one Mt.Dew per day regardless of the price.If this is true,then Mark's demand for Mt.Dew is represented by demand curve

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  D. 
A)  A. 
B)  B. 
C)  C. 
D)  D.

Question 20

If sellers do not adjust their quantity supplied at all in response to a change in price,the price elasticity of supply is

Accepted Answer

A)  zero, and the supply curve is horizontal. 
B)  zero, and the supply curve is vertical. 
C)  infinity, and the supply curve is horizontal. 
D)  infinity, and the supply curve is vertical. 
A)  zero, and the supply curve is horizontal. 
B)  zero, and the supply curve is vertical. 
C)  infinity, and the supply curve is horizontal. 
D)  infinity, and the supply curve is vertical.

Exam 5: Elasticity and Its Application

If the price of calculators increases by 15 percent and the quantity demanded per week falls by 45 percent as a result,then the price elasticity of demand is 3.

If the price elasticity of supply for a good is equal to infinity,then the

Whether a good is a luxury or necessity depends on the

How does the concept of elasticity allow us to improve upon our understanding of supply and demand?

If we observe that when the price of chocolate increases by 10%,quantity demanded falls by 5%,then the demand for chocolate is price inelastic.

Figure 5-12 -Refer to Figure 5-12.Total revenue when the price is P₁ is represented by the area(s)

Figure 5-16 -Refer to Figure 5-16.Using the midpoint method,what is the price elasticity of supply between point B and point C?

For a horizontal demand curve,

If we observe that when the price of chocolate decreases by 10%,quantity demanded increases by 25%,then the demand for chocolate is price elastic.

Elasticity is

For a particular good,a 10 percent increase in price causes a 3 percent decrease in quantity demanded.Which of the following statements is most likely applicable to this good?

Suppose the cross-price elasticity of demand between hot dogs and mustard is -2.00.This implies that a 20 percent increase in the price of hot dogs will cause the quantity of mustard purchased to

If sellers do not adjust their quantities supplied at all in response to a change in price,

Table 5-6 -Refer to Table 5-6.Which scenario describes the market for oil in the short run?

Figure 5-14 -Refer to Figure 5-14.Using the midpoint method,what is the price elasticity of supply between points A and B?

Demand for a good is said to be inelastic if the quantity demanded increases slightly when the price falls by a large amount.

Figure 5-14 -Refer to Figure 5-14.Along which of these segments of the supply curve is supply least elastic?

If the price elasticity of demand for a good is 0.25,then a 20 percent decrease in price results in a

Figure 5-3 -Refer to Figure 5-3.Mark says he would buy one Mt.Dew per day regardless of the price.If this is true,then Mark's demand for Mt.Dew is represented by demand curve

If sellers do not adjust their quantity supplied at all in response to a change in price,the price elasticity of supply is

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.

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