Question 1

Figure 5-14  
-Refer to Figure 5-14.Using the midpoint method,what is the price elasticity of supply between $4 and $6?

Accepted Answer

A)  0.75 
B)  1.00 
C)  1.20 
D)  1.25 
A)  0.75 
B)  1.00 
C)  1.20 
D)  1.25

Question 2

At a price of $1.00,a local coffee shop is willing to supply 100 cinnamon rolls per day.At a price of $1.20,the coffee shop would be willing to supply 150 cinnamon rolls per day.Using the midpoint method,the price elasticity of supply is

Accepted Answer

A)  0.45 
B)  0.90 
C)  1.11 
D)  2.20 
A)  0.45 
B)  0.90 
C)  1.11 
D)  2.20

Question 3

Demand is inelastic if elasticity is

Accepted Answer

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

Question 4

If demand is price inelastic,then when price rises,

Accepted Answer

A)  total revenue will fall. 
B)  total revenue will rise. 
C)  total revenue will remain unchanged. 
D)  total revenue may rise,fall,or remain unchanged.More information is need to determine the change in total revenue with certainty. 
A)  total revenue will fall. 
B)  total revenue will rise. 
C)  total revenue will remain unchanged. 
D)  total revenue may rise,fall,or remain unchanged.More information is need to determine the change in total revenue with certainty.

Question 5

Figure 5-4  
-Refer to Figure 5-4.If the price increases in the region of the demand curve between points A and B,we can expect total revenue to

Accepted Answer

A)  increase. 
B)  stay the same. 
C)  decrease. 
D)  first increase,then decrease until total revenue is maximized. 
A)  increase. 
B)  stay the same. 
C)  decrease. 
D)  first increase,then decrease until total revenue is maximized.

Question 6

If the price elasticity of supply for wheat is less than 1,then the supply of wheat is

Accepted Answer

A)  inelastic. 
B)  elastic. 
C)  unit elastic. 
D)  quite sensitive to changes in income. 
A)  inelastic. 
B)  elastic. 
C)  unit elastic. 
D)  quite sensitive to changes in income.

Question 7

Which of the following could be the price elasticity of demand for a good for which an increase in price would increase revenue?

Accepted Answer

A)  0.2 
B)  1 
C)  1.5 
D)  All of the above could be correct. 
A)  0.2 
B)  1 
C)  1.5 
D)  All of the above could be correct.

Question 8

Scenario 5-4
Suppose the government is concerned about firms in the United States importing illegal caviar.As a result,the government increases border patrols to catch illegal shipments.U.S.Customs agents perform DNA testing on the caviar to determine if it comes from endangered species of fish.If so,the government destroys the caviar.
-Refer to Scenario 5-4.What would we expect to observe in the caviar market?

Accepted Answer

A)  Equilibrium prices and quantities will increase. 
B)  Equilibrium prices will increase by more if the demand for caviar is elastic than if demand is inelastic. 
C)  Total revenues to caviar firms will increase if the demand for caviar is inelastic. 
D)  All of the above are correct. 
A)  Equilibrium prices and quantities will increase. 
B)  Equilibrium prices will increase by more if the demand for caviar is elastic than if demand is inelastic. 
C)  Total revenues to caviar firms will increase if the demand for caviar is inelastic. 
D)  All of the above are correct.

Question 9

Figure 5-5  
-Refer to Figure 5-5.The maximum value of total revenue corresponds to a price of

Accepted Answer

A)  $18. 
B)  $30. 
C)  $42. 
D)  $48. 
A)  $18. 
B)  $30. 
C)  $42. 
D)  $48.

Question 10

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 11

Figure 5-11  
-Refer to Figure 5-11.When the price is $30,total revenue is

Accepted Answer

A)  $3,000. 
B)  $5,000. 
C)  $7,000. 
D)  $9,000. 
A)  $3,000. 
B)  $5,000. 
C)  $7,000. 
D)  $9,000.

Question 12

Figure 5-7
The following graph shows the linear demand curve for a particular good.  
-Refer to Figure 5-7.For prices below $6,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.

Question 13

If the price elasticity of supply is 1.5,and a price increase led to a 1.8% increase in quantity supplied,then the price increase amounted to

Accepted Answer

A)  0.67%. 
B)  0.83%. 
C)  1.20%. 
D)  2.70%. 
A)  0.67%. 
B)  0.83%. 
C)  1.20%. 
D)  2.70%.

Question 14

Which of the following should be held constant when calculating an income elasticity of demand?

Accepted Answer

A)  the quantity of the good demanded 
B)  the price of the good 
C)  income 
D)  All of the above should be held constant. 
A)  the quantity of the good demanded 
B)  the price of the good 
C)  income 
D)  All of the above should be held constant.

Question 15

Which of the following would be true as the price elasticity of supply approaches infinity?

Accepted Answer

A)  Very small changes in price lead to very large changes in quantity supplied. 
B)  Very large changes in price lead to very small changes in quantity supplied. 
C)  Very small changes in price lead to no change in quantity supplied. 
D)  Very large changes in price lead to no change in quantity supplied. 
A)  Very small changes in price lead to very large changes in quantity supplied. 
B)  Very large changes in price lead to very small changes in quantity supplied. 
C)  Very small changes in price lead to no change in quantity supplied. 
D)  Very large changes in price lead to no change in quantity supplied.

Question 16

Demand is said to be price elastic if

Accepted Answer

A)  the price of the good responds substantially to changes in demand. 
B)  demand shifts substantially when income or the expected future price of the good changes. 
C)  buyers do not respond much to changes in the price of the good. 
D)  buyers respond substantially to changes in the price of the good. 
A)  the price of the good responds substantially to changes in demand. 
B)  demand shifts substantially when income or the expected future price of the good changes. 
C)  buyers do not respond much to changes in the price of the good. 
D)  buyers respond substantially to changes in the price of the good.

Question 17

Using the midpoint method,the price elasticity of demand for a good is computed to be approximately 2.Which of the following events is consistent with a 0.1 percent increase in the price of the good?

Accepted Answer

A)  The quantity of the good demanded decreases from 250 to 150. 
B)  The quantity of the good demanded decreases from 200 to 100. 
C)  The quantity of the good demanded decreases by 0.05 percent. 
D)  The quantity of the good demanded decreases by 0.2 percent. 
A)  The quantity of the good demanded decreases from 250 to 150. 
B)  The quantity of the good demanded decreases from 200 to 100. 
C)  The quantity of the good demanded decreases by 0.05 percent. 
D)  The quantity of the good demanded decreases by 0.2 percent.

Question 18

The greater the price elasticity of demand,the

Accepted Answer

A)  more likely the product is a necessity. 
B)  smaller the responsiveness of quantity demanded to a change in price. 
C)  greater the percentage change in price over the percentage change in quantity demanded. 
D)  greater the responsiveness of quantity demanded to a change in price. 
A)  more likely the product is a necessity. 
B)  smaller the responsiveness of quantity demanded to a change in price. 
C)  greater the percentage change in price over the percentage change in quantity demanded. 
D)  greater the responsiveness of quantity demanded to a change in price.

Question 19

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

Accepted Answer

A)  0.01 percent. 
B)  2 percent. 
C)  20 percent. 
D)  200 percent. 
A)  0.01 percent. 
B)  2 percent. 
C)  20 percent. 
D)  200 percent.

Question 20

If the price elasticity of demand for tuna is 0.7,then a 1.5% increase in the price of tuna will decrease the quantity demanded of tuna by

Accepted Answer

A)  1.05%,and tuna sellers' total revenue will increase as a result. 
B)  1.05%,and tuna sellers' total revenue will decrease as a result. 
C)  2.14%,and tuna sellers' total revenue will increase as a result. 
D)  2.14%,and tuna sellers' total revenue will decrease as a result. 
A)  1.05%,and tuna sellers' total revenue will increase as a result. 
B)  1.05%,and tuna sellers' total revenue will decrease as a result. 
C)  2.14%,and tuna sellers' total revenue will increase as a result. 
D)  2.14%,and tuna sellers' total revenue will decrease as a result.

Exam 5: Elasticity and Its Application

Figure 5-14 -Refer to Figure 5-14.Using the midpoint method,what is the price elasticity of supply between $4 and $6?

At a price of $1.00,a local coffee shop is willing to supply 100 cinnamon rolls per day.At a price of $1.20,the coffee shop would be willing to supply 150 cinnamon rolls per day.Using the midpoint method,the price elasticity of supply is

Demand is inelastic if elasticity is

If demand is price inelastic,then when price rises,

Figure 5-4 -Refer to Figure 5-4.If the price increases in the region of the demand curve between points A and B,we can expect total revenue to

If the price elasticity of supply for wheat is less than 1,then the supply of wheat is

Which of the following could be the price elasticity of demand for a good for which an increase in price would increase revenue?

Figure 5-5 -Refer to Figure 5-5.The maximum value of total revenue corresponds to a price of

If the price elasticity of supply is zero,then

Figure 5-11 -Refer to Figure 5-11.When the price is $30,total revenue is

Figure 5-7 The following graph shows the linear demand curve for a particular good. -Refer to Figure 5-7.For prices below $6,demand is price

If the price elasticity of supply is 1.5,and a price increase led to a 1.8% increase in quantity supplied,then the price increase amounted to

Which of the following should be held constant when calculating an income elasticity of demand?

Which of the following would be true as the price elasticity of supply approaches infinity?

Demand is said to be price elastic if

Using the midpoint method,the price elasticity of demand for a good is computed to be approximately 2.Which of the following events is consistent with a 0.1 percent increase in the price of the good?

The greater the price elasticity of demand,the

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

If the price elasticity of demand for tuna is 0.7,then a 1.5% increase in the price of tuna will decrease the quantity demanded of tuna by

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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