Question 1

What is the main determinant of the price elasticity of supply

Accepted Answer

A) time 
B) the number of sellers in the market 
C) the number of close substitutes 
D) luxuries versus necessities 
A) time 
B) the number of sellers in the market 
C) the number of close substitutes 
D) luxuries versus necessities

Question 2

What would result from government attempts to reduce the flow of illegal drugs into the country

Accepted Answer

A) Drug interdiction would lower prices and total revenue in the drug market. 
B) Drug interdiction would decrease drug-related crime. 
C) Drug interdiction would shift the supply curve of drugs to the left. 
D) Drug interdiction would shift the demand curve for drugs to the left. 
A) Drug interdiction would lower prices and total revenue in the drug market. 
B) Drug interdiction would decrease drug-related crime. 
C) Drug interdiction would shift the supply curve of drugs to the left. 
D) Drug interdiction would shift the demand curve for drugs to the left.

Question 3

Cross-price elasticity is used to determine whether goods are inferior or normal goods.

Accepted Answer

A) True 
 B)False

Question 4

When the Shaffers had a monthly income of $8,000,they would usually eat out eight times a month.Now that the couple makes $8,500 a month,they eat out ten 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 5

Figure 5-8
  
-Refer to Figure 5-8.What is the slope and elasticity between point A and point B

Accepted Answer

A) The slope is equal to -1/4 and elasticity is equal to 2/3. 
B) The slope is equal to -1/4 and elasticity is equal to 3/2. 
C) The slope is equal to -3/2 and elasticity is equal to 1/4. 
D) The slope is equal to -2/3 and elasticity is equal to 1/4. 
A) The slope is equal to -1/4 and elasticity is equal to 2/3. 
B) The slope is equal to -1/4 and elasticity is equal to 3/2. 
C) The slope is equal to -3/2 and elasticity is equal to 1/4. 
D) The slope is equal to -2/3 and elasticity is equal to 1/4.

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Why do some firms experience elastic supply curves at low levels of quantity supplied and more inelastic supply curves at higher levels of quantity supplied

Accepted Answer

A) At lower levels of quantity supplied, these firms have idle capacity. 
B) At higher levels of quantity supplied, these firms incur lower production costs. 
C) At lower levels of quantity supplied, these firms incur higher production costs. 
D) At higher levels of quantity supplied, these firms have idle capacity. 
A) At lower levels of quantity supplied, these firms have idle capacity. 
B) At higher levels of quantity supplied, these firms incur lower production costs. 
C) At lower levels of quantity supplied, these firms incur higher production costs. 
D) At higher levels of quantity supplied, these firms have idle capacity.

Question 8

OPEC failed to maintain a high price of oil in the long run because both the supply of oil and the demand for oil are more elastic in the long run than in the short run.

Accepted Answer

A) True 
 B)False

Question 9

Alyssa says that she would buy one banana split a day regardless of the price.Assume she is telling the truth,what do we know

Accepted Answer

A) Alyssa's demand for banana splits is perfectly inelastic. 
B) Alyssa's demand for banana splits is perfectly elastic. 
C) Alyssa's price elasticity of demand for banana splits is 1. 
D) Alyssa's income elasticity of demand for banana splits is negative. 
A) Alyssa's demand for banana splits is perfectly inelastic. 
B) Alyssa's demand for banana splits is perfectly elastic. 
C) Alyssa's price elasticity of demand for banana splits is 1. 
D) Alyssa's income elasticity of demand for banana splits is negative.

Question 10

How do most economists report the elasticity of demand

Accepted Answer

A) as the absolute value of the actual number 
B) as a negative number, since price and quantity demanded move in opposite directions 
C) as a percentage, since both the numerator and denominator are percentages 
D) as a dollar amount, since we are measuring the change in price 
A) as the absolute value of the actual number 
B) as a negative number, since price and quantity demanded move in opposite directions 
C) as a percentage, since both the numerator and denominator are percentages 
D) as a dollar amount, since we are measuring the change in price

Question 11

Why would vanilla cupcakes tend to have very elastic demand

Accepted Answer

A) because it has many complements 
B) because the market is broadly defined 
C) because there are few substitutes 
D) because other flavours of cupcakes are almost perfect substitutes 
A) because it has many complements 
B) because the market is broadly defined 
C) because there are few substitutes 
D) because other flavours of cupcakes are almost perfect substitutes

Question 12

What is the main reason for using the midpoint method

Accepted Answer

A) It gives the same answer regardless of the direction of change. 
B) It uses fewer numbers. 
C) It rounds prices to the nearest dollar. 
D) It rounds quantities to the nearest whole unit. 
A) It gives the same answer regardless of the direction of change. 
B) It uses fewer numbers. 
C) It rounds prices to the nearest dollar. 
D) It rounds quantities to the nearest whole unit.

Question 13

You own a small town movie theatre.You currently charge $5 per ticket for everyone who comes to your movies.Your friend who took an economics course in college tells you that there may be a way to increase your total revenue.Given the demand curves shown,answer the following questions.
   a.What is your current total revenue for both groups
b.The elasticity of demand is more elastic in which market
c.Which market has the more inelastic demand
d.What is the elasticity of demand between the prices of $5 and $2 in the adult market
 Is this elastic or inelastic
e.What is the elasticity of demand between $5 and $3 in the children's market
 Is this elastic or inelastic
f.Given the graphs and what your friend knows about economics,he recommends you increase the price of adult tickets to $8 each and lower the price of a child's ticket to $3.How much could you increase total revenue if you take his advice

Accepted Answer

a.Total revenue from children's tickets

Question 14

Assume that a six percent increase in income results in a three percent increase in the quantity demanded of a good.What is the income elasticity of demand for the good,and what type of good is it

Accepted Answer

A) negative, and therefore the good is an inferior good 
B) negative, and therefore the good is a normal good 
C) positive, and therefore the good is a normal good 
D) positive, and therefore the good is an inferior good 
A) negative, and therefore the good is an inferior good 
B) negative, and therefore the good is a normal good 
C) positive, and therefore the good is a normal good 
D) positive, and therefore the good is an inferior good

Question 15

When will a decrease in supply cause the largest increase in price

Accepted Answer

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

Question 16

Last year,Ravi bought six pairs of shoes when his income was $60,000.This year,his income is $70,000 and he purchased 10 pairs of shoes.All else constant,what can we determine about Ravi

Accepted Answer

A) He has a price-elastic demand for shoes. 
B) He considers shoes to be an inferior good. 
C) He considers shoes to be a normal good. 
D) He has a price-inelastic demand for shoes. 
A) He has a price-elastic demand for shoes. 
B) He considers shoes to be an inferior good. 
C) He considers shoes to be a normal good. 
D) He has a price-inelastic demand for shoes.

Question 17

What does a perfectly elastic demand imply

Accepted Answer

A) Buyers will not respond to any change in price. 
B) Any rise in price above that represented by the demand curve will result in no output demanded. 
C) Price and quantity demanded respond proportionally. 
D) Price will rise by an infinite amount when there is a change in quantity demanded. 
A) Buyers will not respond to any change in price. 
B) Any rise in price above that represented by the demand curve will result in no output demanded. 
C) Price and quantity demanded respond proportionally. 
D) Price will rise by an infinite amount when there is a change in quantity demanded.

Question 18

When will a good have a more inelastic demand

Accepted Answer

A) when the availability of close substitutes is less 
B) when the definition of the market is narrower 
C) when the period of time is longer 
D) when the good is considered a luxury 
A) when the availability of close substitutes is less 
B) when the definition of the market is narrower 
C) when the period of time is longer 
D) when the good is considered a luxury

Question 19

What does the price elasticity of supply measure

Accepted Answer

A) how responsive sellers are to a change in price 
B) how responsive buyers are to a change in income 
C) how responsive buyers are to a change in price 
D) how responsive sellers are to a change in buyers' income 
A) how responsive sellers are to a change in price 
B) how responsive buyers are to a change in income 
C) how responsive buyers are to a change in price 
D) how responsive sellers are to a change in buyers' income

Question 20

What do advocates of drug interdiction argue

Accepted Answer

A) Its benefits may be more short run rather than long run. 
B) Higher drug prices caused by such policies might discourage drug experimentation by young people. 
C) It is too costly for the government to implement such a program. 
D) The program is out-dated and should be replaced with a drug education program. 
A) Its benefits may be more short run rather than long run. 
B) Higher drug prices caused by such policies might discourage drug experimentation by young people. 
C) It is too costly for the government to implement such a program. 
D) The program is out-dated and should be replaced with a drug education program.

What is the main determinant of the price elasticity of supply

What would result from government attempts to reduce the flow of illegal drugs into the country

Cross-price elasticity is used to determine whether goods are inferior or normal goods.

Figure 5-8 -Refer to Figure 5-8.What is the slope and elasticity between point A and point B

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

Why do some firms experience elastic supply curves at low levels of quantity supplied and more inelastic supply curves at higher levels of quantity supplied

OPEC failed to maintain a high price of oil in the long run because both the supply of oil and the demand for oil are more elastic in the long run than in the short run.

Alyssa says that she would buy one banana split a day regardless of the price.Assume she is telling the truth,what do we know

How do most economists report the elasticity of demand

Why would vanilla cupcakes tend to have very elastic demand

What is the main reason for using the midpoint method

Assume that a six percent increase in income results in a three percent increase in the quantity demanded of a good.What is the income elasticity of demand for the good,and what type of good is it

When will a decrease in supply cause the largest increase in price

Last year,Ravi bought six pairs of shoes when his income was $60,000.This year,his income is $70,000 and he purchased 10 pairs of shoes.All else constant,what can we determine about Ravi

What does a perfectly elastic demand imply

When will a good have a more inelastic demand

What does the price elasticity of supply measure

What do advocates of drug interdiction argue

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 Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Filters

Exam 5: Elasticity and Its Application

What is the main determinant of the price elasticity of supply

What would result from government attempts to reduce the flow of illegal drugs into the country

Cross-price elasticity is used to determine whether goods are inferior or normal goods.

Figure 5-8 -Refer to Figure 5-8.What is the slope and elasticity between point A and point B

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

Why do some firms experience elastic supply curves at low levels of quantity supplied and more inelastic supply curves at higher levels of quantity supplied

OPEC failed to maintain a high price of oil in the long run because both the supply of oil and the demand for oil are more elastic in the long run than in the short run.

Alyssa says that she would buy one banana split a day regardless of the price.Assume she is telling the truth,what do we know

How do most economists report the elasticity of demand

Why would vanilla cupcakes tend to have very elastic demand

What is the main reason for using the midpoint method

Assume that a six percent increase in income results in a three percent increase in the quantity demanded of a good.What is the income elasticity of demand for the good,and what type of good is it

When will a decrease in supply cause the largest increase in price

Last year,Ravi bought six pairs of shoes when his income was $60,000.This year,his income is $70,000 and he purchased 10 pairs of shoes.All else constant,what can we determine about Ravi

What does a perfectly elastic demand imply

When will a good have a more inelastic demand

What does the price elasticity of supply measure

What do advocates of drug interdiction argue

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 Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Filters