Question 1

Which of the following statements is correct?

Accepted Answer

A)  The demand for flat-screen computer monitors is more elastic than the demand for monitors in general. 
B)  The demand for grandfather clocks is more elastic than the demand for clocks in general. 
C)  The demand for cardboard is more elastic over a long period of time than over a short period of time. 
D)  All of the above are correct. 
A)  The demand for flat-screen computer monitors is more elastic than the demand for monitors in general. 
B)  The demand for grandfather clocks is more elastic than the demand for clocks in general. 
C)  The demand for cardboard is more elastic over a long period of time than over a short period of time. 
D)  All of the above are correct.

Question 2

Demand is elastic if elasticity is

Accepted Answer

A)  less than 1. 
B)  equal to 1. 
C)  equal to 0. 
D)  greater than 1. 
A)  less than 1. 
B)  equal to 1. 
C)  equal to 0. 
D)  greater than 1.

Question 3

Scenario 5-3
Milk has an inelastic demand and beef has an elastic demand.Suppose that a mysterious increase in bovine infertility decreases both the population of dairy cows and the population of beef cattle by 50 percent.
-Refer to Scenario 5-3.The change in equilibrium quantity will be

Accepted Answer

A)  greater in the milk market than in the beef market. 
B)  greater in the beef market than in the milk market. 
C)  the same in the milk and beef markets. 
D)  may be greater in either the milk market or the beef market. 
A)  greater in the milk market than in the beef market. 
B)  greater in the beef market than in the milk market. 
C)  the same in the milk and beef markets. 
D)  may be greater in either the milk market or the beef market.

Question 4

Scenario 5-1
The supply of aged cheddar cheese is inelastic and the supply of bread is elastic.Both goods are considered to be normal goods by a majority of consumers.Suppose that a large income tax increase decreases the demand for both goods by 10%.
-Refer to Scenario 5-1.The price elasticity of supply for aged cheddar cheese could be

Accepted Answer

A)  -1. 
B)  0 
C)  0.5 
D)  1.5. 
A)  -1. 
B)  0 
C)  0.5 
D)  1.5.

Question 5

A person who takes a prescription drug to control high cholesterol most likely has a demand for that drug that is

Accepted Answer

A)  inelastic. 
B)  unit elastic. 
C)  elastic. 
D)  highly responsive to changes in income. 
A)  inelastic. 
B)  unit elastic. 
C)  elastic. 
D)  highly responsive to changes in income.

Question 6

Table 5-2
The following table shows a portion of the demand schedule for a particular good at various levels of income.
  
-Refer to Table 5-2.Using the midpoint method,at a price of $16,what is the income elasticity of demand when income rises from $5,000 to $10,000?

Accepted Answer

A)  0.00 
B)  0.50 
C)  1.00 
D)  1.50 
A)  0.00 
B)  0.50 
C)  1.00 
D)  1.50

Question 7

If the demand for donuts is elastic,then a decrease in the price of donuts will

Accepted Answer

A)  increase total revenue of donut sellers. 
B)  decrease total revenue of donut sellers. 
C)  not change total revenue of donut sellers. 
D)  There is not enough information to answer this question. 
A)  increase total revenue of donut sellers. 
B)  decrease total revenue of donut sellers. 
C)  not change total revenue of donut sellers. 
D)  There is not enough information to answer this question.

Question 8

Supply and demand both tend to be more elastic in the long run and more inelastic in the short run.

Accepted Answer

A) True 
 B)False

Question 9

Normal goods have negative income elasticities of demand,while inferior goods have positive income elasticities of demand.

Accepted Answer

A) True 
 B)False

Question 10

A good will have a more inelastic demand,

Accepted Answer

A)  the greater the availability of close substitutes. 
B)  the broader the definition of the market. 
C)  the longer the period of time. 
D)  the more it is regarded as a luxury. 
A)  the greater the availability of close substitutes. 
B)  the broader the definition of the market. 
C)  the longer the period of time. 
D)  the more it is regarded as a luxury.

Question 11

Figure 5-3  
-Refer to Figure 5-3.Between point A and point B,

Accepted Answer

A)  the slope is equal to -1/4 and the price elasticity of demand is equal to 2/3. 
B)  the slope is equal to -1/4 and the price elasticity of demand is equal to 3/2. 
C)  the slope is equal to -3/2 and the price elasticity of demand is equal to 1/4. 
D)  the slope is equal to -2/3 and the price elasticity of demand is equal to 3/2. 
A)  the slope is equal to -1/4 and the price elasticity of demand is equal to 2/3. 
B)  the slope is equal to -1/4 and the price elasticity of demand is equal to 3/2. 
C)  the slope is equal to -3/2 and the price elasticity of demand is equal to 1/4. 
D)  the slope is equal to -2/3 and the price elasticity of demand is equal to 3/2.

Question 12

Figure 5-6  
-Refer to Figure 5-6.Using the midpoint method,the price elasticity of demand between point B and point C is

Accepted Answer

A)  0.5. 
B)  0.75. 
C)  1.0. 
D)  1.3. 
A)  0.5. 
B)  0.75. 
C)  1.0. 
D)  1.3.

Question 13

Scenario 5-2
The supply of aged cheddar cheese is inelastic,and the supply of bread is elastic.Both goods are considered to be normal goods by a majority of consumers.Suppose that a large income tax increase decreases the demand for both goods by 10%.
-Refer to Scenario 5-2.The change in equilibrium quantity will be

Accepted Answer

A)  greater in the aged cheddar cheese market than in the bread market. 
B)  greater in the bread market than in the aged cheddar cheese market. 
C)  the same in the aged cheddar cheese and bread markets. 
D)  may be greater in either the aged cheddar cheese market or the bread market. 
A)  greater in the aged cheddar cheese market than in the bread market. 
B)  greater in the bread market than in the aged cheddar cheese market. 
C)  the same in the aged cheddar cheese and bread markets. 
D)  may be greater in either the aged cheddar cheese market or the bread market.

Question 14

Figure 5-10  
-Refer to Figure 5-10.If rectangle D is larger than rectangle A,then

Accepted Answer

A)  demand is elastic between prices P1 and P2. 
B)  a decrease in price from P2 to P1 will cause an increase in total revenue. 
C)  the magnitude of the percent change in price between P1 and P2 is smaller than the magnitude of the corresponding percent change in quantity demanded. 
D)  All of the above are correct. 
A)  demand is elastic between prices P1 and P2. 
B)  a decrease in price from P2 to P1 will cause an increase in total revenue. 
C)  the magnitude of the percent change in price between P1 and P2 is smaller than the magnitude of the corresponding percent change in quantity demanded. 
D)  All of the above are correct.

Question 15

Which of the following statements is correct?

Accepted Answer

A)  The demand for natural gas is more elastic over a short period of time than over a long period of time. 
B)  The demand for smoke alarms is more elastic than the demand for Persian rugs. 
C)  The demand for bourbon whiskey is more elastic than the demand for alcoholic beverages in general. 
D)  All of the above are correct. 
A)  The demand for natural gas is more elastic over a short period of time than over a long period of time. 
B)  The demand for smoke alarms is more elastic than the demand for Persian rugs. 
C)  The demand for bourbon whiskey is more elastic than the demand for alcoholic beverages in general. 
D)  All of the above are correct.

Question 16

The price elasticity of supply measures how responsive

Accepted Answer

A)  equilibrium price is to equilibrium quantity. 
B)  sellers are to a change in buyers' income. 
C)  sellers are to a change in price. 
D)  consumers are to the number of substitutes. 
A)  equilibrium price is to equilibrium quantity. 
B)  sellers are to a change in buyers' income. 
C)  sellers are to a change in price. 
D)  consumers are to the number of substitutes.

Question 17

According to a New York Times article published in November 2005,author Anna Bernasek asserts that a 10 percent increase in the price of electricity leads to a decline in the quantity demanded of about

Accepted Answer

A)  0.01 percent. 
B)  3 percent. 
C)  30 percent. 
D)  300 percent. 
A)  0.01 percent. 
B)  3 percent. 
C)  30 percent. 
D)  300 percent.

Question 18

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 19

Because the demand for wheat tends to be inelastic,the development of a new,more productive hybrid wheat would tend to

Accepted Answer

A)  increase the total revenue of wheat farmers. 
B)  decrease the total revenue of wheat farmers. 
C)  decrease the demand for wheat. 
D)  decrease the supply of wheat. 
A)  increase the total revenue of wheat farmers. 
B)  decrease the total revenue of wheat farmers. 
C)  decrease the demand for wheat. 
D)  decrease the supply of wheat.

Question 20

Figure 5-7
The following graph shows the linear demand curve for a particular good.  
-Refer to Figure 5-7.For prices above $8,demand is price

Accepted Answer

A)  elastic,and total revenue will rise as price rises. 
B)  inelastic,and total revenue will rise as price rises. 
C)  elastic,and total revenue will fall as price rises. 
D)  inelastic,and total revenue will fall as price rises. 
A)  elastic,and total revenue will rise as price rises. 
B)  inelastic,and total revenue will rise as price rises. 
C)  elastic,and total revenue will fall as price rises. 
D)  inelastic,and total revenue will fall as price rises.

Exam 5: Elasticity and Its Application

Which of the following statements is correct?

Demand is elastic if elasticity is

Scenario 5-3 Milk has an inelastic demand and beef has an elastic demand.Suppose that a mysterious increase in bovine infertility decreases both the population of dairy cows and the population of beef cattle by 50 percent. -Refer to Scenario 5-3.The change in equilibrium quantity will be

A person who takes a prescription drug to control high cholesterol most likely has a demand for that drug that is

Table 5-2 The following table shows a portion of the demand schedule for a particular good at various levels of income. -Refer to Table 5-2.Using the midpoint method,at a price of $16,what is the income elasticity of demand when income rises from $5,000 to $10,000?

If the demand for donuts is elastic,then a decrease in the price of donuts will

Supply and demand both tend to be more elastic in the long run and more inelastic in the short run.

Normal goods have negative income elasticities of demand,while inferior goods have positive income elasticities of demand.

A good will have a more inelastic demand,

Figure 5-3 -Refer to Figure 5-3.Between point A and point B,

Figure 5-6 -Refer to Figure 5-6.Using the midpoint method,the price elasticity of demand between point B and point C is

Figure 5-10 -Refer to Figure 5-10.If rectangle D is larger than rectangle A,then

Which of the following statements is correct?

The price elasticity of supply measures how responsive

According to a New York Times article published in November 2005,author Anna Bernasek asserts that a 10 percent increase in the price of electricity leads to a decline in the quantity demanded of about

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

Because the demand for wheat tends to be inelastic,the development of a new,more productive hybrid wheat would tend to

Figure 5-7 The following graph shows the linear demand curve for a particular good. -Refer to Figure 5-7.For prices above $8,demand is price

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

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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