Question 1

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 2

Supply is said to be inelastic if the quantity supplied responds substantially to changes in the price,and elastic if the quantity supplied responds only slightly to price.

Accepted Answer

A) True 
 B)False

Question 3

Figure 5-1
  
-Refer to Figure 5-1.Assume the section of the demand curve labeled A corresponds to prices between $8 and $16.Then,when the price changes between $9 and $10,

Accepted Answer

A) quantity demanded changes proportionately less than the price. 
B) quantity demanded changes proportionately more than the price. 
C) quantity demanded changes the same amount proportionately as price. 
D) the price elasticity of demand is less than 1. 
A) quantity demanded changes proportionately less than the price. 
B) quantity demanded changes proportionately more than the price. 
C) quantity demanded changes the same amount proportionately as price. 
D) the price elasticity of demand is less than 1.

Question 4

How did the farm population in the United States change between 1950 and 2000?

Accepted Answer

A) It dropped from 10 million to fewer than 3 million people. 
B) It dropped from 20 million to fewer than 5 million people. 
C) It dropped from 30 million to just over 6 million people. 
D) It increased from 10 million to almost 12 million people. 
A) It dropped from 10 million to fewer than 3 million people. 
B) It dropped from 20 million to fewer than 5 million people. 
C) It dropped from 30 million to just over 6 million people. 
D) It increased from 10 million to almost 12 million people.

Question 5

Using the midpoint method,the price elasticity of demand for a good is computed to be approximately 1.5.Which of the following events is consistent with a 3.5 percent increase in the price of the good?

Accepted Answer

A) The quantity of the good demanded decreases from 25,294 to 24,000. 
B) The quantity of the good demanded decreases from 50,000 to 48,847. 
C) The quantity of the good demanded decreases by 2.33 percent. 
D) The quantity of the good demanded decreases by 4.29 percent. 
A) The quantity of the good demanded decreases from 25,294 to 24,000. 
B) The quantity of the good demanded decreases from 50,000 to 48,847. 
C) The quantity of the good demanded decreases by 2.33 percent. 
D) The quantity of the good demanded decreases by 4.29 percent.

Question 6

Figure 5-12
  
-Refer to Figure 5-12.Along which of these segments of the supply curve is supply least elastic?

Accepted Answer

A) between E and F 
B) between C and D 
C) between A and C 
D) between A and B 
A) between E and F 
B) between C and D 
C) between A and C 
D) between A and B

Question 7

When quantity moves proportionately the same amount as price,demand is

Accepted Answer

A) elastic and the price elasticity of demand is 1. 
B) perfectly elastic and the price elasticity of demand is infinitely large. 
C) perfectly inelastic and the price elasticity of demand is 0. 
D) unit elastic and the price elasticity of demand is 1. 
A) elastic and the price elasticity of demand is 1. 
B) perfectly elastic and the price elasticity of demand is infinitely large. 
C) perfectly inelastic and the price elasticity of demand is 0. 
D) unit elastic and the price elasticity of demand is 1.

Question 8

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 9

Elasticity of demand is closely related to the slope of the demand curve.The more responsive buyers are to a change in price,the

Accepted Answer

A) steeper the demand curve will be. 
B) flatter the demand curve will be. 
C) further to the right the demand curve will sit. 
D) closer to the vertical axis the demand curve will sit. 
A) steeper the demand curve will be. 
B) flatter the demand curve will be. 
C) further to the right the demand curve will sit. 
D) closer to the vertical axis the demand curve will sit.

Question 10

Last year,Joan bought 50 pounds of hamburger when her household's income was $40,000.This year,her household income was only $30,000 and Joan bought 60 pounds of hamburger.All else constant,Joan's income elasticity of demand for hamburger is

Accepted Answer

A) positive, so Joan considers hamburger to be an inferior good. 
B) positive, so Joan considers hamburger to be a normal good and a necessity. 
C) negative, so Joan considers hamburger to be an inferior good. 
D) negative, so Joan considers hamburger to be a normal good, but not a necessity. 
A) positive, so Joan considers hamburger to be an inferior good. 
B) positive, so Joan considers hamburger to be a normal good and a necessity. 
C) negative, so Joan considers hamburger to be an inferior good. 
D) negative, so Joan considers hamburger to be a normal good, but not a necessity.

Question 11

When the Shaffers had a monthly income of $4,000,they usually ate out 8 times a month.Now that the couple makes $4,500 a month,they eat out 10 times a month.Compute the couple's income elasticity of demand using the midpoint method.Explain your answer.(Is a restaurant meal a normal or inferior good to the couple?)

Accepted Answer

The income elasticity of deman

Question 12

When we move upward and to the left along a linear demand curve,price elasticity of demand

Accepted Answer

A) first becomes smaller, then larger. 
B) always becomes larger. 
C) always becomes smaller. 
D) first becomes larger, then smaller. 
A) first becomes smaller, then larger. 
B) always becomes larger. 
C) always becomes smaller. 
D) first becomes larger, then smaller.

Question 13

When demand is perfectly inelastic,the price elasticity of demand

Accepted Answer

A) is zero and the demand curve is vertical. 
B) is zero and the demand curve is horizontal. 
C) approaches infinity and the demand curve is vertical. 
D) approaches infinity and the demand curve is horizontal. 
A) is zero and the demand curve is vertical. 
B) is zero and the demand curve is horizontal. 
C) approaches infinity and the demand curve is vertical. 
D) approaches infinity and the demand curve is horizontal.

Question 14

Figure 5-8. A demand curve is shown on the graph below. On the graph, Q represents quantity demanded and P represents price.
  
-Refer to Figure 5-8.Demand is unit elastic between prices of

Accepted Answer

A) $18 and $24. 
B) $24 and $30. 
C) $24 and $36. 
D) $30 and $36. 
A) $18 and $24. 
B) $24 and $30. 
C) $24 and $36. 
D) $30 and $36.

Question 15

In January the price of widgets was $2.00 and Wendy's Widgets produced 80 widgets.In February the price of widgets was $2.50 and Wendy's Widgets produced 110 widgets.In March the price of widgets was $3.00 and Wendy's Widgets produced 140 widgets.The price elasticity of supply of Wendy's Widgets was

Accepted Answer

A) 0.70 when the price increased from $2.00 to $2.50 and 0.76 when the price increased from $2.50 to $3.00. 
B) 0.88 when the price increased from $2.00 to $2.50 and 1.08 when the price increased from $2.50 to $3.00. 
C) 1.42 when the price increased from $2.00 to $2.50 and 1.32 when the price increased from $2.50 to $3.00. 
D) 1.50 when the price increased from $2.00 to $2.50 and 1.18 when the price increased from $2.50 to $3.00. 
A) 0.70 when the price increased from $2.00 to $2.50 and 0.76 when the price increased from $2.50 to $3.00. 
B) 0.88 when the price increased from $2.00 to $2.50 and 1.08 when the price increased from $2.50 to $3.00. 
C) 1.42 when the price increased from $2.00 to $2.50 and 1.32 when the price increased from $2.50 to $3.00. 
D) 1.50 when the price increased from $2.00 to $2.50 and 1.18 when the price increased from $2.50 to $3.00.

Question 16

Figure 5-10
  
-Refer to Figure 5-10.If,holding the supply curve fixed,there were an increase in demand that caused the equilibrium price to increase from $6 to $8,then sellers' total revenue would

Accepted Answer

A) increase. 
B) decrease. 
C) remain unchanged. 
D) The effect on total revenue cannot be determined from the given information. 
A) increase. 
B) decrease. 
C) remain unchanged. 
D) The effect on total revenue cannot be determined from the given information.

Question 17

If a change in the price of a good results in no change in total revenue,then

Accepted Answer

A) the demand for the good must be elastic. 
B) the demand for the good must be inelastic. 
C) the demand for the good must be unit elastic. 
D) buyers must not respond very much to a change in price. 
A) the demand for the good must be elastic. 
B) the demand for the good must be inelastic. 
C) the demand for the good must be unit elastic. 
D) buyers must not respond very much to a change in price.

Question 18

If a 30 percent change in price causes a 15 percent change in quantity supplied,then the price elasticity of supply is

Accepted Answer

A) 0.5 and supply is elastic. 
B) 0.5 and supply is inelastic. 
C) 2 and supply is inelastic. 
D) 2 and supply is elastic. 
A) 0.5 and supply is elastic. 
B) 0.5 and supply is inelastic. 
C) 2 and supply is inelastic. 
D) 2 and supply is elastic.

Question 19

Figure 5-2
  
-Refer to Figure 5-2.Sellers' total revenue would increase if the price

Accepted Answer

A) increased from $4 to $6. 
B) increased from $16 to $18. 
C) decreased from $8 to $6. 
D) All of the above are correct. 
A) increased from $4 to $6. 
B) increased from $16 to $18. 
C) decreased from $8 to $6. 
D) All of the above are correct.

Question 20

Table 5-1
  
-Refer to Table 5-1.Using the midpoint method,the income elasticity of demand for good Y is

Accepted Answer

A) 2.33 and good Y is a normal good. 
B) -2.33 and Y is an inferior good. 
C) -0.43 and Y is an inferior good. 
D) -0.43 and Y is a law-of-demand good. 
A) 2.33 and good Y is a normal good. 
B) -2.33 and Y is an inferior good. 
C) -0.43 and Y is an inferior good. 
D) -0.43 and Y is a law-of-demand good.

Exam 5: Elasticity and Its Applications

If the price elasticity of supply is zero,then

Supply is said to be inelastic if the quantity supplied responds substantially to changes in the price,and elastic if the quantity supplied responds only slightly to price.

Figure 5-1 -Refer to Figure 5-1.Assume the section of the demand curve labeled A corresponds to prices between $8 and $16.Then,when the price changes between $9 and $10,

How did the farm population in the United States change between 1950 and 2000?

Using the midpoint method,the price elasticity of demand for a good is computed to be approximately 1.5.Which of the following events is consistent with a 3.5 percent increase in the price of the good?

Figure 5-12 -Refer to Figure 5-12.Along which of these segments of the supply curve is supply least elastic?

When quantity moves proportionately the same amount as price,demand is

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

Elasticity of demand is closely related to the slope of the demand curve.The more responsive buyers are to a change in price,the

Last year,Joan bought 50 pounds of hamburger when her household's income was $40,000.This year,her household income was only $30,000 and Joan bought 60 pounds of hamburger.All else constant,Joan's income elasticity of demand for hamburger is

When we move upward and to the left along a linear demand curve,price elasticity of demand

When demand is perfectly inelastic,the price elasticity of demand

Figure 5-8. A demand curve is shown on the graph below. On the graph, Q represents quantity demanded and P represents price. -Refer to Figure 5-8.Demand is unit elastic between prices of

Figure 5-10 -Refer to Figure 5-10.If,holding the supply curve fixed,there were an increase in demand that caused the equilibrium price to increase from $6 to $8,then sellers' total revenue would

If a change in the price of a good results in no change in total revenue,then

If a 30 percent change in price causes a 15 percent change in quantity supplied,then the price elasticity of supply is

Figure 5-2 -Refer to Figure 5-2.Sellers' total revenue would increase if the price

Table 5-1 -Refer to Table 5-1.Using the midpoint method,the income elasticity of demand for good Y 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

Oligopoly

Monopolistic Competition

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short Run Trade Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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