Question 1

If sellers do not adjust their quantities supplied at all in response to a change in price,

Accepted Answer

A)  advances in technology must be prevalent. 
B)  the time period under consideration must be very long. 
C)  supply is perfectly elastic. 
D)  supply is perfectly inelastic. 
A)  advances in technology must be prevalent. 
B)  the time period under consideration must be very long. 
C)  supply is perfectly elastic. 
D)  supply is perfectly inelastic.

Question 2

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)  Any of the above could be correct. 
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)  Any of the above could be correct.

Question 3

A key determinant of the price elasticity of supply is

Accepted Answer

A)  the ability of sellers to change the price of the good they produce. 
B)  the ability of sellers to change the amount of the good they produce. 
C)  how responsive buyers are to changes in sellers' prices. 
D)  the slope of the demand curve. 
A)  the ability of sellers to change the price of the good they produce. 
B)  the ability of sellers to change the amount of the good they produce. 
C)  how responsive buyers are to changes in sellers' prices. 
D)  the slope of the demand curve.

Question 4

If the cross-price elasticity of demand for two goods is -4.5,then

Accepted Answer

A)  the two goods are substitutes. 
B)  the two goods are complements. 
C)  one of the goods is normal while the other good is inferior. 
D)  one of the goods is a luxury while the other good is a necessity. 
A)  the two goods are substitutes. 
B)  the two goods are complements. 
C)  one of the goods is normal while the other good is inferior. 
D)  one of the goods is a luxury while the other good is a necessity.

Question 5

Using the midpoint method,the price elasticity of demand for a good is computed to be approximately 0.75.Which of the following events is consistent with a 10 percent decrease in the quantity of the good demanded?

Accepted Answer

A)  a 7.5 increase in the price of the good 
B)  a 13.33 percent increase in the price of the good 
C)  an increase in the price of the good from $7.50 to $10 
D)  an increase in the price of the good from $10 to $17.50 
A)  a 7.5 increase in the price of the good 
B)  a 13.33 percent increase in the price of the good 
C)  an increase in the price of the good from $7.50 to $10 
D)  an increase in the price of the good from $10 to $17.50

Question 6

Price elasticity of supply measures how much the quantity supplied responds to changes in the price.

Accepted Answer

A) True 
 B)False

Question 7

The price elasticity of demand for bread

Accepted Answer

A)  is computed as the percentage change in quantity demanded of bread divided by the percentage change in price of bread. 
B)  depends,in part,on the availability of close substitutes for bread. 
C)  reflects the many economic,social,and psychological forces that influence consumers' tastes for bread. 
D)  All of the above are correct. 
A)  is computed as the percentage change in quantity demanded of bread divided by the percentage change in price of bread. 
B)  depends,in part,on the availability of close substitutes for bread. 
C)  reflects the many economic,social,and psychological forces that influence consumers' tastes for bread. 
D)  All of the above are correct.

Question 8

The cross-price elasticity of garlic salt and onion salt is -2,which indicates that garlic salt and onion salt are substitutes.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A)  lattés 
B)  doctor's visits 
C)  eggs 
D)  natural gas 
A)  lattés 
B)  doctor's visits 
C)  eggs 
D)  natural gas

Question 10

Figure 5-7  
-Refer to Figure 5-7.For prices below $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.

Question 11

If the price of natural gas rises,when is the price elasticity of demand likely to be the highest?

Accepted Answer

A)  immediately after the price increase 
B)  one month after the price increase 
C)  three months after the price increase 
D)  one year after the price increase 
A)  immediately after the price increase 
B)  one month after the price increase 
C)  three months after the price increase 
D)  one year after the price increase

Question 12

Table 5-6
  
-Refer to Table 5-6.Which scenario describes the market for oil in the short run?

Accepted Answer

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

Question 13

A good will have a more elastic demand,the

Accepted Answer

A)  greater the availability of close substitutes. 
B)  more broad the definition of the market. 
C)  shorter the period of time. 
D)  more it is regarded as a necessity. 
A)  greater the availability of close substitutes. 
B)  more broad the definition of the market. 
C)  shorter the period of time. 
D)  more it is regarded as a necessity.

Question 14

Holding all other forces constant,when the price of gasoline rises,the number of gallons of gasoline demanded would fall substantially over a ten-year period because

Accepted Answer

A)  buyers tend to be much less sensitive to a change in price when given more time to react. 
B)  buyers tend to be much more sensitive to a change in price when given more time to react. 
C)  buyers will have substantially more real income over a ten-year period. 
D)  the quantity supplied of gasoline increases very little in response to an increase in the price of gasoline. 
A)  buyers tend to be much less sensitive to a change in price when given more time to react. 
B)  buyers tend to be much more sensitive to a change in price when given more time to react. 
C)  buyers will have substantially more real income over a ten-year period. 
D)  the quantity supplied of gasoline increases very little in response to an increase in the price of gasoline.

Question 15

When the local used bookstore prices economics books at $15 each,it generally sells 70 books per month.If it lowers the price to $7,sales increase to 90 books per month.Given this information,we know that the price elasticity of demand for economics books is about

Accepted Answer

A)  2.91,and an increase in price from $7 to $15 results in an increase in total revenue. 
B)  2.91,and an increase in price from $7 to $15 results in a decrease in total revenue. 
C)  0.34,and an increase in price from $7 to $15 results in an increase in total revenue. 
D)  0.34,and an increase in price from $7 to $15 results in a decrease in total revenue. 
A)  2.91,and an increase in price from $7 to $15 results in an increase in total revenue. 
B)  2.91,and an increase in price from $7 to $15 results in a decrease in total revenue. 
C)  0.34,and an increase in price from $7 to $15 results in an increase in total revenue. 
D)  0.34,and an increase in price from $7 to $15 results in a decrease in total revenue.

Question 16

Figure 5-1  
-Refer to Figure 5-1.Between point A and point B on the graph,demand is

Accepted Answer

A)  perfectly elastic. 
B)  inelastic. 
C)  unit elastic. 
D)  elastic,but not perfectly elastic. 
A)  perfectly elastic. 
B)  inelastic. 
C)  unit elastic. 
D)  elastic,but not perfectly elastic.

Question 17

The price elasticity of demand for a good measures the willingness of

Accepted Answer

A)  consumers to buy less of the good as price rises. 
B)  consumers to avoid monopolistic markets in favor of competitive markets. 
C)  firms to produce more of a good as price rises. 
D)  firms to respond to the tastes of consumers. 
A)  consumers to buy less of the good as price rises. 
B)  consumers to avoid monopolistic markets in favor of competitive markets. 
C)  firms to produce more of a good as price rises. 
D)  firms to respond to the tastes of consumers.

Question 18

At price of $1.25,a paper manufacturer is willing to supply 150 spiral notebooks per day.At a price of $1.50,the paper manufacturer is willing to supply 175 spiral notebooks per day.Using the midpoint method,the price elasticity of supply is about

Accepted Answer

A)  1.18. 
B)  1.00. 
C)  0.85. 
D)  0.25. 
A)  1.18. 
B)  1.00. 
C)  0.85. 
D)  0.25.

Question 19

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 20

Necessities such as food and clothing tend to have

Accepted Answer

A)  high price elasticities of demand and high income elasticities of demand. 
B)  high price elasticities of demand and low income elasticities of demand. 
C)  low price elasticities of demand and high income elasticities of demand. 
D)  low price elasticities of demand and low income elasticities of demand. 
A)  high price elasticities of demand and high income elasticities of demand. 
B)  high price elasticities of demand and low income elasticities of demand. 
C)  low price elasticities of demand and high income elasticities of demand. 
D)  low price elasticities of demand and low income elasticities of demand.

Exam 5: Elasticity and Its Application

If sellers do not adjust their quantities supplied at all in response to a change in price,

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 key determinant of the price elasticity of supply is

If the cross-price elasticity of demand for two goods is -4.5,then

Using the midpoint method,the price elasticity of demand for a good is computed to be approximately 0.75.Which of the following events is consistent with a 10 percent decrease in the quantity of the good demanded?

Price elasticity of supply measures how much the quantity supplied responds to changes in the price.

The price elasticity of demand for bread

The cross-price elasticity of garlic salt and onion salt is -2,which indicates that garlic salt and onion salt are substitutes.

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

Figure 5-7 -Refer to Figure 5-7.For prices below $8,demand is price

If the price of natural gas rises,when is the price elasticity of demand likely to be the highest?

Table 5-6 -Refer to Table 5-6.Which scenario describes the market for oil in the short run?

A good will have a more elastic demand,the

Holding all other forces constant,when the price of gasoline rises,the number of gallons of gasoline demanded would fall substantially over a ten-year period because

When the local used bookstore prices economics books at $15 each,it generally sells 70 books per month.If it lowers the price to $7,sales increase to 90 books per month.Given this information,we know that the price elasticity of demand for economics books is about

Figure 5-1 -Refer to Figure 5-1.Between point A and point B on the graph,demand is

The price elasticity of demand for a good measures the willingness of

At price of $1.25,a paper manufacturer is willing to supply 150 spiral notebooks per day.At a price of $1.50,the paper manufacturer is willing to supply 175 spiral notebooks per day.Using the midpoint method,the price elasticity of supply is about

The price elasticity of supply measures how responsive

Necessities such as food and clothing tend to have

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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