Question 1

Total revenue is equal to

Accepted Answer

A) the amount of funds earned by a firm minus its costs of production. 
B) the total quantity sold of a product over a given period of time. 
C) the price of a product multiplied by the number of units of the product sold. 
D) the monetary value of the capital (for example, plant and equipment)a firm owns. 
A) the amount of funds earned by a firm minus its costs of production. 
B) the total quantity sold of a product over a given period of time. 
C) the price of a product multiplied by the number of units of the product sold. 
D) the monetary value of the capital (for example, plant and equipment)a firm owns.

Question 2

Most food products have low income and price elasticities of demand.

Accepted Answer

A) True 
 B)False

Question 3

Seth is a competitive body builder.He says he has to have his 12-oz package of protein powder to "feed his muscles" every day.On the basis of this information, what can you conclude about his price elasticity of demand for protein powder?

Accepted Answer

A) It is elastic. 
B) It is perfectly elastic. 
C) It is perfectly inelastic. 
D) The price elasticity coefficient is 1. 
A) It is elastic. 
B) It is perfectly elastic. 
C) It is perfectly inelastic. 
D) The price elasticity coefficient is 1.

Question 4

The estimated price elasticities of demand for the products listed in the table as "Product A" are from Table 6-2 in the text.Indicate whether the products listed as "Product B" will have a more elastic or less elastic demand than the corresponding Product A.

Accepted Answer

The answer of The estimated price elasticities of demand for...

Question 5

Suppose Pump-U-Up lowers the price of its gym membership by 10 percent and as a result, Sweat-It-Out experienced a 16 percent decline in its gym membership.What is the value of the cross-price elasticity between the two gym memberships?

Accepted Answer

A) -1.6 
B) -0.625 
C) 0.625 
D) 1.6 
A) -1.6 
B) -0.625 
C) 0.625 
D) 1.6

Question 6

If the price elasticity of demand for canned soup is estimated at -1.62.What happens to sales revenue if the price of canned soup rises?

Accepted Answer

A) It falls by 162 percent. 
B) It rises by 1.62 percent. 
C) It falls. 
D) It rises. 
A) It falls by 162 percent. 
B) It rises by 1.62 percent. 
C) It falls. 
D) It rises.

Question 7

In September 2006, the Food and Drug Administration recommended that Americans avoid eating bagged raw spinach in the wake of an outbreak of E.coli bacteria.Following this recommendation, the food industry looked at alternatives and many turned to arugula.One Chicago distributor claimed, "The sale of the stuff has gone through the roof." Based on this information

Accepted Answer

A) arugula is a normal good while raw spinach is an inferior good. 
B) the cross-price elasticity between arugula and spinach is negative. 
C) the cross-price elasticity between arugula and spinach is positive. 
D) the price elasticity of arugula is positive while the price elasticity of spinach falls to zero. 
A) arugula is a normal good while raw spinach is an inferior good. 
B) the cross-price elasticity between arugula and spinach is negative. 
C) the cross-price elasticity between arugula and spinach is positive. 
D) the price elasticity of arugula is positive while the price elasticity of spinach falls to zero.

Question 8

In general, a "big ticket item" such as a house or new car will

Accepted Answer

A) tend to have a more elastic demand than a lower-priced good. 
B) tend to have an inelastic demand because spending on the item takes up a large share of the average consumer's budget. 
C) tend to have an inelastic demand because it has many substitutes. 
D) tend to have a more inelastic demand the more time that passes. 
A) tend to have a more elastic demand than a lower-priced good. 
B) tend to have an inelastic demand because spending on the item takes up a large share of the average consumer's budget. 
C) tend to have an inelastic demand because it has many substitutes. 
D) tend to have a more inelastic demand the more time that passes.

Question 9

Which of the following goods would have the most inelastic demand?

Accepted Answer

A) ski vacations 
B) bread 
C) luxury cars 
D) big screen TVs 
A) ski vacations 
B) bread 
C) luxury cars 
D) big screen TVs

Question 10

Between 1950 and 2017, the number of acres devoted to wheat production in the United States ________ and the price of wheat ________.

Accepted Answer

A) declined; decreased 
B) more than doubled; increased by about 50 percent 
C) declined; more than doubled 
D) increased; more than doubled 
A) declined; decreased 
B) more than doubled; increased by about 50 percent 
C) declined; more than doubled 
D) increased; more than doubled

Question 11

Between 1950 and 2017 the productivity of wheat farmers in the United States more than doubled.This means that

Accepted Answer

A) the amount of land and other resources devoted to wheat production more than doubled. 
B) the incomes of wheat farmers more than doubled. 
C) the total amount of wheat produced more than doubled. 
D) the amount of wheat produced by the average farmer more than doubled. 
A) the amount of land and other resources devoted to wheat production more than doubled. 
B) the incomes of wheat farmers more than doubled. 
C) the total amount of wheat produced more than doubled. 
D) the amount of wheat produced by the average farmer more than doubled.

Question 12

Suppose a 4 percent increase in price results in a 2 percent increase in the quantity supplied of a good.Calculate the price elasticity of supply and characterize the product.

Accepted Answer

A) 2; The product is elastic. 
B) 0.2; The product is inelastic. 
C) 0.5; The product is inelastic. 
D) 50%; The product is inelastic. 
A) 2; The product is elastic. 
B) 0.2; The product is inelastic. 
C) 0.5; The product is inelastic. 
D) 50%; The product is inelastic.

Question 13

Figure 6-3
  
-Refer to Figure 6-3.Using the midpoint formula, calculate the absolute value of the price elasticity of demand between e and f.

Accepted Answer

A) 0.32 
B) 0.4 
C) 2.5 
D) 3.125 
A) 0.32 
B) 0.4 
C) 2.5 
D) 3.125

Question 14

Explain the concepts of cross-price elasticity of demand and income elasticity of demand.What do positive and negative values indicate for each of these demand elasticities?

Accepted Answer

Cross-price elasticity of demand measure

Question 15

Suppose that when the price per ream of recycled printer paper rises from $4 to $4.50, the quantity demanded falls from 800 to 600 reams per day.Using the midpoint formula, what is the price elasticity of demand (in absolute value)over this range?

Accepted Answer

A) 0.003 
B) 0.41 
C) 2.43 
D) 4 
A) 0.003 
B) 0.41 
C) 2.43 
D) 4

Question 16

If the demand for a product is perfectly inelastic, a decrease in the price of the product

Accepted Answer

A) will increase total revenue. 
B) will decrease total revenue. 
C) will not change total revenue. 
D) any of the above are possible. 
A) will increase total revenue. 
B) will decrease total revenue. 
C) will not change total revenue. 
D) any of the above are possible.

Question 17

If at a price of $50, Ghani sells 20 hand-made leather cell-phone covers but at a price of $60, zero units are sold.Based on this information, the demand for his cell-phone covers is

Accepted Answer

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

Question 18

Figure 6-4
  
-Refer to Figure 6-4.The inelastic segment of the demand curve

Accepted Answer

A) is coincident with the horizontal axis. 
B) is coincident with the vertical axis. 
C) lies below the midpoint of the curve. 
D) lies above the midpoint of the curve. 
A) is coincident with the horizontal axis. 
B) is coincident with the vertical axis. 
C) lies below the midpoint of the curve. 
D) lies above the midpoint of the curve.

Question 19

Jill Borts believes that the price elasticity of demand for her economics textbook is relatively inelastic.She argues "I was told I had to purchase a book written by Hubbard and O'Brien that is required by my instructor.If I wanted to buy a mystery novel I would have many authors to choose from.Therefore, the demand for mystery novels is more elastic than the demand for my textbook." Is Jill correct?

Accepted Answer

A) The demand for the textbook is more inelastic, but Jill's reasoning is incorrect. The reason the textbook has an inelastic demand is that it is more expensive than any novel. 
B) She is correct. 
C) She is confused. She should have concluded that the textbook has a more elastic demand than a novel. 
D) She is correct that the textbook has a more inelastic demand, but that is because most students pay for their textbooks with credit cards. Most people pay for novels and other books with debit cards. 
A) The demand for the textbook is more inelastic, but Jill's reasoning is incorrect. The reason the textbook has an inelastic demand is that it is more expensive than any novel. 
B) She is correct. 
C) She is confused. She should have concluded that the textbook has a more elastic demand than a novel. 
D) She is correct that the textbook has a more inelastic demand, but that is because most students pay for their textbooks with credit cards. Most people pay for novels and other books with debit cards.

Question 20

In 2016, Philadelphia imposed a tax of 1.5 cents per ounce on sweetened beverages, and PepsiCo indicated that its sales in Philadelphia fell by 40 percent after the tax took effect.If the demand for sweetened beverages in Philadelphia is unit elastic, then the price of Pepsico's sweetened beverages in Philadelphia would have increased by ________ percent following the implementation of the tax.

Accepted Answer

A)  40 
D) The price would not have changed if demand was unit elastic. 
A)  40 
D) The price would not have changed if demand was unit elastic.

Total revenue is equal to

Most food products have low income and price elasticities of demand.

Seth is a competitive body builder.He says he has to have his 12-oz package of protein powder to "feed his muscles" every day.On the basis of this information, what can you conclude about his price elasticity of demand for protein powder?

The estimated price elasticities of demand for the products listed in the table as "Product A" are from Table 6-2 in the text.Indicate whether the products listed as "Product B" will have a more elastic or less elastic demand than the corresponding Product A.

Suppose Pump-U-Up lowers the price of its gym membership by 10 percent and as a result, Sweat-It-Out experienced a 16 percent decline in its gym membership.What is the value of the cross-price elasticity between the two gym memberships?

If the price elasticity of demand for canned soup is estimated at -1.62.What happens to sales revenue if the price of canned soup rises?

In general, a "big ticket item" such as a house or new car will

Which of the following goods would have the most inelastic demand?

Between 1950 and 2017, the number of acres devoted to wheat production in the United States and the price of wheat .

Between 1950 and 2017 the productivity of wheat farmers in the United States more than doubled.This means that

Suppose a 4 percent increase in price results in a 2 percent increase in the quantity supplied of a good.Calculate the price elasticity of supply and characterize the product.

Figure 6-3 -Refer to Figure 6-3.Using the midpoint formula, calculate the absolute value of the price elasticity of demand between e and f.

Explain the concepts of cross-price elasticity of demand and income elasticity of demand.What do positive and negative values indicate for each of these demand elasticities?

Suppose that when the price per ream of recycled printer paper rises from $4 to $4.50, the quantity demanded falls from 800 to 600 reams per day.Using the midpoint formula, what is the price elasticity of demand (in absolute value)over this range?

If the demand for a product is perfectly inelastic, a decrease in the price of the product

If at a price of $50, Ghani sells 20 hand-made leather cell-phone covers but at a price of $60, zero units are sold.Based on this information, the demand for his cell-phone covers is

Figure 6-4 -Refer to Figure 6-4.The inelastic segment of the demand curve

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Filters

Exam 6: Elasticity: the Responsiveness of Demand and Supply

Total revenue is equal to

Most food products have low income and price elasticities of demand.

Seth is a competitive body builder.He says he has to have his 12-oz package of protein powder to "feed his muscles" every day.On the basis of this information, what can you conclude about his price elasticity of demand for protein powder?

The estimated price elasticities of demand for the products listed in the table as "Product A" are from Table 6-2 in the text.Indicate whether the products listed as "Product B" will have a more elastic or less elastic demand than the corresponding Product A.

Suppose Pump-U-Up lowers the price of its gym membership by 10 percent and as a result, Sweat-It-Out experienced a 16 percent decline in its gym membership.What is the value of the cross-price elasticity between the two gym memberships?

If the price elasticity of demand for canned soup is estimated at -1.62.What happens to sales revenue if the price of canned soup rises?

In general, a "big ticket item" such as a house or new car will

Which of the following goods would have the most inelastic demand?

Between 1950 and 2017, the number of acres devoted to wheat production in the United States ________ and the price of wheat ________.

Between 1950 and 2017 the productivity of wheat farmers in the United States more than doubled.This means that

Suppose a 4 percent increase in price results in a 2 percent increase in the quantity supplied of a good.Calculate the price elasticity of supply and characterize the product.

Figure 6-3 -Refer to Figure 6-3.Using the midpoint formula, calculate the absolute value of the price elasticity of demand between e and f.

Explain the concepts of cross-price elasticity of demand and income elasticity of demand.What do positive and negative values indicate for each of these demand elasticities?

Suppose that when the price per ream of recycled printer paper rises from $4 to $4.50, the quantity demanded falls from 800 to 600 reams per day.Using the midpoint formula, what is the price elasticity of demand (in absolute value)over this range?

If the demand for a product is perfectly inelastic, a decrease in the price of the product

If at a price of $50, Ghani sells 20 hand-made leather cell-phone covers but at a price of $60, zero units are sold.Based on this information, the demand for his cell-phone covers is

Figure 6-4 -Refer to Figure 6-4.The inelastic segment of the demand curve

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Filters

Between 1950 and 2017, the number of acres devoted to wheat production in the United States and the price of wheat .