Question 1

The demand curve for a good that has many perfect substitutes is likely to be _____

Accepted Answer

A) upward sloping. 
B) steep. 
C) backward bending. 
D) horizontal. 
E) vertical. 
A) upward sloping. 
B) steep. 
C) backward bending. 
D) horizontal. 
E) vertical.

Question 2

Exhibit 5.2
  
-Refer to Exhibit 5.2 which shows a demand curve,D.D is a(n)_____

Accepted Answer

A) upward-sloping demand curve. 
B) linear demand curve. 
C) perfectly elastic demand curve. 
D) unit-elastic demand curve. 
E) perfectly inelastic demand curve. 
A) upward-sloping demand curve. 
B) linear demand curve. 
C) perfectly elastic demand curve. 
D) unit-elastic demand curve. 
E) perfectly inelastic demand curve.

Question 3

When agricultural production increases,the total amount paid for agricultural products tends to _____

Accepted Answer

A) increase because demand is perfectly elastic. 
B) decrease because demand is price elastic. 
C) increase because demand is price inelastic. 
D) decrease because demand is price inelastic. 
E) remain constant because demand is price inelastic. 
A) increase because demand is perfectly elastic. 
B) decrease because demand is price elastic. 
C) increase because demand is price inelastic. 
D) decrease because demand is price inelastic. 
E) remain constant because demand is price inelastic.

Question 4

The cross-price elasticity of demand between pancakes and waffles is positive.This indicates all of the following except one.Which of the following is the exception?

Accepted Answer

A) Pancakes and waffles are substitutes. 
B) An increase in the price of pancakes will shift the demand curve for waffles to the right. 
C) An increase in the price of waffles will shift the demand curve for pancakes to the right. 
D) A decrease in the supply of waffles will shift the demand curve for pancakes to the right. 
E) The demand for pancakes and the demand for waffles are price elastic. 
A) Pancakes and waffles are substitutes. 
B) An increase in the price of pancakes will shift the demand curve for waffles to the right. 
C) An increase in the price of waffles will shift the demand curve for pancakes to the right. 
D) A decrease in the supply of waffles will shift the demand curve for pancakes to the right. 
E) The demand for pancakes and the demand for waffles are price elastic.

Question 5

Along a linear demand curve,as the price increases from zero,_____

Accepted Answer

A) demand decreases. 
B) demand increases. 
C) quantity demanded increases. 
D) total revenue first increases but eventually decreases. 
E) total revenue first decreases but eventually increases. 
A) demand decreases. 
B) demand increases. 
C) quantity demanded increases. 
D) total revenue first increases but eventually decreases. 
E) total revenue first decreases but eventually increases.

Question 6

If income rises and the demand for a product remains unchanged,the income elasticity of demand for that product is unit elastic.

Accepted Answer

A) True 
 B)False

Question 7

Price elasticity is 1 at the midpoint of a linear downward-sloping demand curve.

Accepted Answer

A) True 
 B)False

Question 8

If an increase in price from $1.20 to $2 per unit leads to an increase in quantity supplied from 20 to 100 units,then _____

Accepted Answer

A) supply is perfectly elastic. 
B) supply is perfectly inelastic. 
C) supply is unit elastic. 
D) supply is elastic. 
E) supply is inelastic. 
A) supply is perfectly elastic. 
B) supply is perfectly inelastic. 
C) supply is unit elastic. 
D) supply is elastic. 
E) supply is inelastic.

Question 9

Both the income elasticity of demand and the cross-price elasticity of demand coefficients can take on negative,zero,or positive values.

Accepted Answer

A) True 
 B)False

Question 10

If the price elasticity of demand for a product is 5,and prices increase 10 percent,then demand will _____

Accepted Answer

A) increase by 5 percent. 
B) increase by 10 percent. 
C) increase by 50 percent. 
D) decrease by 50 percent. 
E) decrease by 3 percent. 
A) increase by 5 percent. 
B) increase by 10 percent. 
C) increase by 50 percent. 
D) decrease by 50 percent. 
E) decrease by 3 percent.

Question 11

Table 5.3
 $$\begin{array} { c c c } 
& \text { Quantity } & \text { Price } \
 \text { Good A } & 100 & \$ 10 \
& 120 & \$ 9 \\
\text { Good B } & 200 & \$ 20 \
& 140 & \$ 35
\end{array}$$
-Refer to Table 5.3,which shows the change in the quantity demanded for Good A and Good B as a result of the change in their price.Use the information to calculate the value of the price elasticity of demand for Good B.

Accepted Answer

A) ?2/3 
B) ?1/6 
C) ?1/2 
D) ?11/17 
E) ?17/11 
A) ?2/3 
B) ?1/6 
C) ?1/2 
D) ?11/17 
E) ?17/11

Question 12

What is the effect of a 10 percent price increase on total revenue if elasticity is larger than zero but less than 1?

Accepted Answer

A) Revenue increases by 10 percent. 
B) Revenue increases by less than 10 percent. 
C) Revenue does not change. 
D) Revenue decreases. 
E) Revenue drops to 0. 
A) Revenue increases by 10 percent. 
B) Revenue increases by less than 10 percent. 
C) Revenue does not change. 
D) Revenue decreases. 
E) Revenue drops to 0.

Question 13

What is the effect of a 10 percent price increase on total revenue if elasticity is equal to 1?

Accepted Answer

A) Revenue increases by 10 percent. 
B) Revenue increases by less than 10 percent. 
C) Revenue does not change. 
D) Revenue decreases. 
E) Revenue drops to 0. 
A) Revenue increases by 10 percent. 
B) Revenue increases by less than 10 percent. 
C) Revenue does not change. 
D) Revenue decreases. 
E) Revenue drops to 0.

Question 14

The demand for Post Raisin Bran is more elastic than the demand for raisin bran in general because _____

Accepted Answer

A) it is consumed in the short run rather than in the long run. 
B) Post Raisin Bran is a luxury. 
C) Post Raisin Bran has no substitutes. 
D) there are many substitutes for raisin bran cereal in general. 
E) Post Raisin Bran is a broadly defined good. 
A) it is consumed in the short run rather than in the long run. 
B) Post Raisin Bran is a luxury. 
C) Post Raisin Bran has no substitutes. 
D) there are many substitutes for raisin bran cereal in general. 
E) Post Raisin Bran is a broadly defined good.

Question 15

Exhibit 5.10
  
-Refer to Exhibit 5.10,which shows two upward-sloping linear supply curves that pass through the origin.The price elasticity of supply between $20 and $40 on the supply curve S' is _____

Accepted Answer

A) 0. 
B) infinity. 
C) 1. 
D) 2. 
E) 10. 
A) 0. 
B) infinity. 
C) 1. 
D) 2. 
E) 10.

Question 16

Exhibit 5.5
  
-Refer to Exhibit 5.5,which shows the total revenue curve for a firm.Which of the following is not true in the range of the total revenue curve labeled A?

Accepted Answer

A) Demand is inelastic. 
B) Total revenue is increasing. 
C) Total revenue is positive. 
D) Demand is elastic. 
E) Demand elasticity decreases as total revenue decreases. 
A) Demand is inelastic. 
B) Total revenue is increasing. 
C) Total revenue is positive. 
D) Demand is elastic. 
E) Demand elasticity decreases as total revenue decreases.

Question 17

Exhibit 5.6
  
-Refer to Exhibit 5.6,which shows a vertical demand curve.The price elasticity of demand is _____

Accepted Answer

A) 0. 
B) −1. 
C) infinity. 
D) 1. 
E) −100. 
A) 0. 
B) −1. 
C) infinity. 
D) 1. 
E) −100.

Question 18

Cross-price elasticity measures the responsiveness of the price of Good A to a change in the price of Good B.

Accepted Answer

A) True 
 B)False

Question 19

If price increases from $45 to $55,the market quantity supplied increases from 20 units per week to 30 units per week.The price elasticity of supply is _____

Accepted Answer

A) 0.5. 
B) 1. 
C) 1.83. 
D) 2.25. 
E) 2. 
A) 0.5. 
B) 1. 
C) 1.83. 
D) 2.25. 
E) 2.

Question 20

Unit-elastic demand occurs when _____

Accepted Answer

A) a one-unit increase in price leads to a one-unit decrease in quantity demanded. 
B) a 1 percent increase in price leads to a one-unit decrease in quantity demanded. 
C) the price elasticity of demand is negative. 
D) the price elasticity of demand is exactly zero. 
E) the price elasticity of demand is exactly 1. 
A) a one-unit increase in price leads to a one-unit decrease in quantity demanded. 
B) a 1 percent increase in price leads to a one-unit decrease in quantity demanded. 
C) the price elasticity of demand is negative. 
D) the price elasticity of demand is exactly zero. 
E) the price elasticity of demand is exactly 1.

Exam 5: Elasticity of Demand and Supply

The demand curve for a good that has many perfect substitutes is likely to be _____

Exhibit 5.2 -Refer to Exhibit 5.2 which shows a demand curve,D.D is a(n)_____

When agricultural production increases,the total amount paid for agricultural products tends to _____

The cross-price elasticity of demand between pancakes and waffles is positive.This indicates all of the following except one.Which of the following is the exception?

Along a linear demand curve,as the price increases from zero,_____

If income rises and the demand for a product remains unchanged,the income elasticity of demand for that product is unit elastic.

Price elasticity is 1 at the midpoint of a linear downward-sloping demand curve.

If an increase in price from $1.20 to $2 per unit leads to an increase in quantity supplied from 20 to 100 units,then _____

Both the income elasticity of demand and the cross-price elasticity of demand coefficients can take on negative,zero,or positive values.

If the price elasticity of demand for a product is 5,and prices increase 10 percent,then demand will _____

Table 5.3 Quantity Price Good A 100 \ 10 120 \ 9 Good B 200 \ 20 140 \ 35 -Refer to Table 5.3,which shows the change in the quantity demanded for Good A and Good B as a result of the change in their price.Use the information to calculate the value of the price elasticity of demand for Good B.

What is the effect of a 10 percent price increase on total revenue if elasticity is larger than zero but less than 1?

What is the effect of a 10 percent price increase on total revenue if elasticity is equal to 1?

The demand for Post Raisin Bran is more elastic than the demand for raisin bran in general because _____

Exhibit 5.10 -Refer to Exhibit 5.10,which shows two upward-sloping linear supply curves that pass through the origin.The price elasticity of supply between $20 and $40 on the supply curve S' is _____

Exhibit 5.5 -Refer to Exhibit 5.5,which shows the total revenue curve for a firm.Which of the following is not true in the range of the total revenue curve labeled A?

Exhibit 5.6 -Refer to Exhibit 5.6,which shows a vertical demand curve.The price elasticity of demand is _____

Cross-price elasticity measures the responsiveness of the price of Good A to a change in the price of Good B.

If price increases from $45 to $55,the market quantity supplied increases from 20 units per week to 30 units per week.The price elasticity of supply is _____

Unit-elastic demand occurs when _____

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