Question 1

Figure 5-7
  
-Refer to Figure 5-7.What areas represent total revenue at P₂

Accepted Answer

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

Question 2

Moving down a linear demand curve,what happens to the slope and the elasticity

Accepted Answer

A) The slope and elasticity are both constant. 
B) The slope changes but elasticity is constant. 
C) The slope and elasticity both get smaller. 
D) The slope is constant but elasticity gets smaller. 
A) The slope and elasticity are both constant. 
B) The slope changes but elasticity is constant. 
C) The slope and elasticity both get smaller. 
D) The slope is constant but elasticity gets smaller.

Question 3

If the quantity supplied responds only slightly to changes in price,what can be said about supply

Accepted Answer

A) Supply is said to be elastic. 
B) Supply is said to be perfectly elastic. 
C) Supply is said to be inelastic. 
D) Supply is said to be unit elastic. 
A) Supply is said to be elastic. 
B) Supply is said to be perfectly elastic. 
C) Supply is said to be inelastic. 
D) Supply is said to be unit elastic.

Question 4

A bakery would be willing to supply 500 bagels per day at a price of $0.50 each.At a price of $0.70,the bakery would be willing to supply 900.Using the midpoint method,what is the elasticity of supply for bagels

Accepted Answer

A) 0.58 
B) 0.77 
C) 1.24 
D) 1.71 
A) 0.58 
B) 0.77 
C) 1.24 
D) 1.71

Question 5

What is the concept of elasticity used for

Accepted Answer

A) to analyze how much the economy can produce 
B) to determine the level of government intervention in the economy 
C) to analyze supply and demand with changes in market condition 
D) to calculate consumer credit purchases 
A) to analyze how much the economy can produce 
B) to determine the level of government intervention in the economy 
C) to analyze supply and demand with changes in market condition 
D) to calculate consumer credit purchases

Question 6

Knowing that the demand for wheat is inelastic,if all farmers voluntarily cut back 10 percent of their wheat crop,what would happen

Accepted Answer

A) Consumers of wheat would buy more wheat. 
B) Wheat farmers would suffer a reduction in their revenue. 
C) Wheat farmers would increase their revenue. 
D) The demand for wheat would decrease. 
A) Consumers of wheat would buy more wheat. 
B) Wheat farmers would suffer a reduction in their revenue. 
C) Wheat farmers would increase their revenue. 
D) The demand for wheat would decrease.

Question 7

If you want to know how an increase in the price of ice cream at the Ice Cream Shoppe affects the demand for frozen yogurt in your shop across the street,what would you compute

Accepted Answer

A) the price elasticity of demand 
B) the income elasticity of demand 
C) the cross-price elasticity of demand 
D) the price elasticity of supply 
A) the price elasticity of demand 
B) the income elasticity of demand 
C) the cross-price elasticity of demand 
D) the price elasticity of supply

Question 8

Figure 5-1
  
-Refer to Figure 5-1.What is the elasticity of demand from point A to point B,using the midpoint method

Accepted Answer

A) 0.4 
B) 1.0 
C) 1.5 
D) 2.5 
A) 0.4 
B) 1.0 
C) 1.5 
D) 2.5

Question 9

What does the price elasticity of demand measure

Accepted Answer

A) a buyer's responsiveness to a change in the price of a good 
B) the increase in demand as additional buyers enter the market 
C) how much more of a good consumers will demand when incomes rise 
D) the increase in demand for a good when there is an increase in its price 
A) a buyer's responsiveness to a change in the price of a good 
B) the increase in demand as additional buyers enter the market 
C) how much more of a good consumers will demand when incomes rise 
D) the increase in demand for a good when there is an increase in its price

Question 10

When is demand said to be inelastic

Accepted Answer

A) if the quantity demanded changes only slightly when the price of the good changes 
B) if demand shifts only slightly when the price of the good changes 
C) if buyers respond substantially to changes in the price of the good 
D) if the price of the good responds only slightly to changes in demand 
A) if the quantity demanded changes only slightly when the price of the good changes 
B) if demand shifts only slightly when the price of the good changes 
C) if buyers respond substantially to changes in the price of the good 
D) if the price of the good responds only slightly to changes in demand

Question 11

What best describes the direction of a perfectly elastic demand curve

Accepted Answer

A) vertical 
B) horizontal 
C) downward sloping to the right 
D) upward sloping to the right 
A) vertical 
B) horizontal 
C) downward sloping to the right 
D) upward sloping to the right

Question 12

A linear demand curve becomes more elastic as price falls.

Accepted Answer

A) True 
 B)False

Question 13

When would demand for a good tend to be more elastic

Accepted Answer

A) when there are fewer options in the market 
B) when the time period considered is shorter 
C) when the good is considered more of a necessity 
D) when the good has more substitutes 
A) when there are fewer options in the market 
B) when the time period considered is shorter 
C) when the good is considered more of a necessity 
D) when the good has more substitutes

Question 14

If the elasticity of supply of a product is 2.2,what do we know about supply

Accepted Answer

A) It is inelastic. 
B) It is elastic. 
C) It is unit elastic. 
D) It is perfectly inelastic. 
A) It is inelastic. 
B) It is elastic. 
C) It is unit elastic. 
D) It is perfectly inelastic.

Question 15

Figure 5-12
  
-Refer to Figure 5-12.When a new,more productive strawberry plant was developed,causing supply to increase,what happened to strawberry farmers,and why

Accepted Answer

A) They were helped, since although price fell, total revenue increased, due to an inelastic demand curve. 
B) They were hurt, since both price and total revenue fell due to an elastic demand curve. 
C) They were hurt, since both price and total revenue fell due to an inelastic demand curve. 
D) They were helped, since although price fell, total revenue increased, due to an elastic demand curve. 
A) They were helped, since although price fell, total revenue increased, due to an inelastic demand curve. 
B) They were hurt, since both price and total revenue fell due to an elastic demand curve. 
C) They were hurt, since both price and total revenue fell due to an inelastic demand curve. 
D) They were helped, since although price fell, total revenue increased, due to an elastic demand curve.

Question 16

What are the most basic tools of economics

Accepted Answer

A) demand and supply 
B) price and quantity 
C) price floors and price ceilings 
D) elasticity of demand and supply 
A) demand and supply 
B) price and quantity 
C) price floors and price ceilings 
D) elasticity of demand and supply

Question 17

What has happened to the farm population in Canada from 1950 to today

Accepted Answer

A) There has been a drop from 25 percent to 3 percent of the Canadian population working on farms. 
B) There has been a 50 percent drop in the number of Canadians working on farms. 
C) There has been an increase from 200,000 to almost 220,000 people working on farms. 
D) There has been a drop from 200,000 to just over 180,000 people working on farms. 
A) There has been a drop from 25 percent to 3 percent of the Canadian population working on farms. 
B) There has been a 50 percent drop in the number of Canadians working on farms. 
C) There has been an increase from 200,000 to almost 220,000 people working on farms. 
D) There has been a drop from 200,000 to just over 180,000 people working on farms.

Question 18

What does the elasticity of a perfectly elastic supply curve equal

Accepted Answer

A) 0 
B) 1 
C) infinity 
D) a value less than 1 but greater than 0 
A) 0 
B) 1 
C) infinity 
D) a value less than 1 but greater than 0

Question 19

What does a perfectly inelastic demand imply

Accepted Answer

A) Buyers decrease their purchases when the price rises. 
B) Buyers purchase the same amount when the price rises or falls. 
C) Buyers increase their purchases only slightly when the price falls. 
D) Buyers respond substantially to an increase in price. 
A) Buyers decrease their purchases when the price rises. 
B) Buyers purchase the same amount when the price rises or falls. 
C) Buyers increase their purchases only slightly when the price falls. 
D) Buyers respond substantially to an increase in price.

Question 20

If sellers do not respond at all to a change in price,what do we know

Accepted Answer

A) Technological advancement must be small. 
B) Supply must be perfectly elastic. 
C) A short period of time must have elapsed. 
D) Supply must be perfectly inelastic. 
A) Technological advancement must be small. 
B) Supply must be perfectly elastic. 
C) A short period of time must have elapsed. 
D) Supply must be perfectly inelastic.

Exam 5: Elasticity and Its Application

Figure 5-7 -Refer to Figure 5-7.What areas represent total revenue at P₂

Moving down a linear demand curve,what happens to the slope and the elasticity

If the quantity supplied responds only slightly to changes in price,what can be said about supply

A bakery would be willing to supply 500 bagels per day at a price of $0.50 each.At a price of $0.70,the bakery would be willing to supply 900.Using the midpoint method,what is the elasticity of supply for bagels

What is the concept of elasticity used for

Knowing that the demand for wheat is inelastic,if all farmers voluntarily cut back 10 percent of their wheat crop,what would happen

If you want to know how an increase in the price of ice cream at the Ice Cream Shoppe affects the demand for frozen yogurt in your shop across the street,what would you compute

Figure 5-1 -Refer to Figure 5-1.What is the elasticity of demand from point A to point B,using the midpoint method

What does the price elasticity of demand measure

When is demand said to be inelastic

What best describes the direction of a perfectly elastic demand curve

A linear demand curve becomes more elastic as price falls.

When would demand for a good tend to be more elastic

If the elasticity of supply of a product is 2.2,what do we know about supply

Figure 5-12 -Refer to Figure 5-12.When a new,more productive strawberry plant was developed,causing supply to increase,what happened to strawberry farmers,and why

What are the most basic tools of economics

What has happened to the farm population in Canada from 1950 to today

What does the elasticity of a perfectly elastic supply curve equal

What does a perfectly inelastic demand imply

If sellers do not respond at all to a change in price,what do we know

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

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