Question 1

Knowing that the demand for wheat is inelastic,if all farmers voluntarily did not plant wheat on 10 percent of their land,then

Accepted Answer

A)  consumers of wheat would buy more wheat. 
B)  wheat farmers would suffer a reduction in their total revenue. 
C)  wheat farmers would experience an increase in their total 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 total revenue. 
C)  wheat farmers would experience an increase in their total revenue. 
D)  the demand for wheat would decrease.

Question 2

Figure 5-14  
-Refer to Figure 5-14.Along which of these segments of the supply curve is supply most elastic?

Accepted Answer

A)  AB 
B)  CD 
C)  DH 
D)  GH 
A)  AB 
B)  CD 
C)  DH 
D)  GH

Question 3

If a change in the price of a good results in no change in total revenue,then

Accepted Answer

A)  the demand for the good must be elastic. 
B)  the demand for the good must be inelastic. 
C)  the demand for the good must be unit elastic. 
D)  buyers must not respond very much to a change in price. 
A)  the demand for the good must be elastic. 
B)  the demand for the good must be inelastic. 
C)  the demand for the good must be unit elastic. 
D)  buyers must not respond very much to a change in price.

Question 4

Elasticity of demand is closely related to the slope of the demand curve.The more responsive buyers are to a change in price,the

Accepted Answer

A)  steeper the demand curve will be. 
B)  flatter the demand curve will be. 
C)  further to the right the demand curve will sit. 
D)  closer to the vertical axis the demand curve will sit. 
A)  steeper the demand curve will be. 
B)  flatter the demand curve will be. 
C)  further to the right the demand curve will sit. 
D)  closer to the vertical axis the demand curve will sit.

Question 5

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

Accepted Answer

A) 	1. 
B) 	1.5. 
C) 	2. 
D) 	2.5. 
A) 	1. 
B) 	1.5. 
C) 	2. 
D) 	2.5.

Question 6

How does the concept of elasticity allow us to improve upon our understanding of supply and demand?

Accepted Answer

A)  Elasticity allows us to analyze supply and demand with greater precision than would be the case in the absence of the elasticity concept. 
B)  Elasticity provides us with a better rationale for statements such as "an increase in x will lead to a decrease in y" than we would have in the absence of the elasticity concept. 
C)  Without elasticity,we would not be able to address the direction in which price is likely to move in response to a surplus or a shortage. 
D)  Without elasticity,it is very difficult to assess the degree of competition within a market. 
A)  Elasticity allows us to analyze supply and demand with greater precision than would be the case in the absence of the elasticity concept. 
B)  Elasticity provides us with a better rationale for statements such as "an increase in x will lead to a decrease in y" than we would have in the absence of the elasticity concept. 
C)  Without elasticity,we would not be able to address the direction in which price is likely to move in response to a surplus or a shortage. 
D)  Without elasticity,it is very difficult to assess the degree of competition within a market.

Question 7

If a 15% increase in price for a good results in a 20% decrease in quantity demanded,the price elasticity of demand is

Accepted Answer

A)  0.75. 
B)  1.25. 
C)  1.33. 
D)  1.60. 
A)  0.75. 
B)  1.25. 
C)  1.33. 
D)  1.60.

Question 8

When demand is perfectly inelastic,the price elasticity of demand

Accepted Answer

A)  is zero,and the demand curve is vertical. 
B)  is zero,and the demand curve is horizontal. 
C)  approaches infinity,and the demand curve is vertical. 
D)  approaches infinity,and the demand curve is horizontal. 
A)  is zero,and the demand curve is vertical. 
B)  is zero,and the demand curve is horizontal. 
C)  approaches infinity,and the demand curve is vertical. 
D)  approaches infinity,and the demand curve is horizontal.

Question 9

When a supply curve is relatively flat,the

Accepted Answer

A)  sellers are not at all responsive to a change in price. 
B)  equilibrium price changes substantially when the demand for the good changes. 
C)  supply is relatively elastic. 
D)  supply is relatively inelastic. 
A)  sellers are not at all responsive to a change in price. 
B)  equilibrium price changes substantially when the demand for the good changes. 
C)  supply is relatively elastic. 
D)  supply is relatively inelastic.

Question 10

If the price elasticity of demand for a good is 0.8,then which of the following events is consistent with a 4 percent decrease in the quantity of the good demanded?

Accepted Answer

A)  a 0.2 percent increase in the price of the good 
B)  a 3.2 percent increase in the price of the good 
C)  a 4.8 percent increase in the price of the good 
D)  a 5 percent increase in the price of the good 
A)  a 0.2 percent increase in the price of the good 
B)  a 3.2 percent increase in the price of the good 
C)  a 4.8 percent increase in the price of the good 
D)  a 5 percent increase in the price of the good

Question 11

Which of the following is likely to have the most price inelastic demand?

Accepted Answer

A)  athletic shoes 
B)  running shoes 
C)  Nike running shoes 
D)  Nike Shox running shoes 
A)  athletic shoes 
B)  running shoes 
C)  Nike running shoes 
D)  Nike Shox running shoes

Question 12

When a supply curve is relatively flat,

Accepted Answer

A)  sellers are not very responsive to changes in price. 
B)  supply is relatively inelastic. 
C)  supply is relatively elastic. 
D)  Both a and b are correct. 
A)  sellers are not very responsive to changes in price. 
B)  supply is relatively inelastic. 
C)  supply is relatively elastic. 
D)  Both a and b are correct.

Question 13

Suppose that when the price of good X falls from $10 to $8,the quantity demanded of good Y rises from 20 units to 25 units.Using the midpoint method,the cross-price elasticity of demand is

Accepted Answer

A)  -1.0,and X and Y are complements. 
B)  -1.0,and X and Y are substitutes. 
C)  1.0,and X and Y are complements. 
D)  1.0,and X and Y are substitutes. 
A)  -1.0,and X and Y are complements. 
B)  -1.0,and X and Y are substitutes. 
C)  1.0,and X and Y are complements. 
D)  1.0,and X and Y are substitutes.

Question 14

In the case of perfectly inelastic demand,

Accepted Answer

A)  the change in quantity demanded equals the change in price. 
B)  the percentage change in quantity demanded equals the percentage change in price. 
C)  infinitely-large changes in quantity demanded result from very small changes in the price. 
D)  quantity demanded stays the same whenever price changes. 
A)  the change in quantity demanded equals the change in price. 
B)  the percentage change in quantity demanded equals the percentage change in price. 
C)  infinitely-large changes in quantity demanded result from very small changes in the price. 
D)  quantity demanded stays the same whenever price changes.

Question 15

Figure 5-17        
-Refer to Figure 5-17.Which of the following statements is correct?

Accepted Answer

A)  Supply curve A is perfectly elastic. 
B)  Supply curve B is perfectly inelastic. 
C)  Supply curve C is more inelastic than supply curve D. 
D)  Supply curve D is unit elastic. 
A)  Supply curve A is perfectly elastic. 
B)  Supply curve B is perfectly inelastic. 
C)  Supply curve C is more inelastic than supply curve D. 
D)  Supply curve D is unit elastic.

Question 16

The price elasticity of demand measures the

Accepted Answer

A)  magnitude of the response in quantity demanded to a change in price. 
B)  direction of the shift in the demand curve in response to a market event. 
C)  size of the shortage created by the increase in demand. 
D)  responsiveness of quantity demanded to a change in income. 
A)  magnitude of the response in quantity demanded to a change in price. 
B)  direction of the shift in the demand curve in response to a market event. 
C)  size of the shortage created by the increase in demand. 
D)  responsiveness of quantity demanded to a change in income.

Question 17

An advantage of using the midpoint method to calculate the price elasticity of demand is that it uses the metric system.

Accepted Answer

A) True 
 B)False

Question 18

Suppose the price elasticity of supply for candles is 0.3 in the short run and 1.2 in the long run.If an increase in the demand for candles causes the price of candles to increase by 36%,then the quantity supplied of candles will increase by about

Accepted Answer

A)  0.8% in the short run and 3.3% in the long run. 
B)  1.2% in the short run and 0.3% in the long run. 
C)  10.8% in the short run and 43.2% in the long run. 
D)  120% in the short run and 30% in the long run. 
A)  0.8% in the short run and 3.3% in the long run. 
B)  1.2% in the short run and 0.3% in the long run. 
C)  10.8% in the short run and 43.2% in the long run. 
D)  120% in the short run and 30% in the long run.

Question 19

For a vertical demand curve,

Accepted Answer

A)  the slope is undefined,and the price elasticity of demand is equal to 0. 
B)  the slope is equal to 0,and the price elasticity of demand is undefined. 
C)  both the slope and price elasticity of demand are undefined. 
D)  both the slope and price elasticity of demand are equal to 0. 
A)  the slope is undefined,and the price elasticity of demand is equal to 0. 
B)  the slope is equal to 0,and the price elasticity of demand is undefined. 
C)  both the slope and price elasticity of demand are undefined. 
D)  both the slope and price elasticity of demand are equal to 0.

Question 20

Which of the following is likely to have the most price inelastic demand?

Accepted Answer

A)  lattés 
B)  filet mignon 
C)  Grey Goose® vodka 
D)  milk 
A)  lattés 
B)  filet mignon 
C)  Grey Goose® vodka 
D)  milk

Exam 5: Elasticity and Its Application

Knowing that the demand for wheat is inelastic,if all farmers voluntarily did not plant wheat on 10 percent of their land,then

Figure 5-14 -Refer to Figure 5-14.Along which of these segments of the supply curve is supply most elastic?

If a change in the price of a good results in no change in total revenue,then

Elasticity of demand is closely related to the slope of the demand curve.The more responsive buyers are to a change in price,the

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

How does the concept of elasticity allow us to improve upon our understanding of supply and demand?

If a 15% increase in price for a good results in a 20% decrease in quantity demanded,the price elasticity of demand is

When demand is perfectly inelastic,the price elasticity of demand

When a supply curve is relatively flat,the

If the price elasticity of demand for a good is 0.8,then which of the following events is consistent with a 4 percent decrease in the quantity of the good demanded?

Which of the following is likely to have the most price inelastic demand?

When a supply curve is relatively flat,

Suppose that when the price of good X falls from $10 to $8,the quantity demanded of good Y rises from 20 units to 25 units.Using the midpoint method,the cross-price elasticity of demand is

In the case of perfectly inelastic demand,

Figure 5-17 -Refer to Figure 5-17.Which of the following statements is correct?

The price elasticity of demand measures the

An advantage of using the midpoint method to calculate the price elasticity of demand is that it uses the metric system.

Suppose the price elasticity of supply for candles is 0.3 in the short run and 1.2 in the long run.If an increase in the demand for candles causes the price of candles to increase by 36%,then the quantity supplied of candles will increase by about

For a vertical demand curve,

Which of the following is likely to have the most price inelastic demand?

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 Costs of Production

Firms in Competitive Markets

Monopoly

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

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

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