Question 1

Exhibit 5.10
  
-Refer to Exhibit 5.10,which shows two upward-sloping linear supply curves that pass through the origin.Which supply curve is more elastic?

Accepted Answer

A) Both S and S' have the same elasticity. 
B) S is more elastic at lower prices, and S' is more elastic at higher prices. 
C) S is more elastic at higher prices, and S' is more elastic at lower prices. 
D) S is more elastic than S'. 
E) S' is more elastic than S. 
A) Both S and S' have the same elasticity. 
B) S is more elastic at lower prices, and S' is more elastic at higher prices. 
C) S is more elastic at higher prices, and S' is more elastic at lower prices. 
D) S is more elastic than S'. 
E) S' is more elastic than S.

Question 2

The supply curve for dorm rooms on a university campus is likely to be _____

Accepted Answer

A) downward sloping. 
B) relatively flat. 
C) vertical. 
D) horizontal. 
E) upward sloping. 
A) downward sloping. 
B) relatively flat. 
C) vertical. 
D) horizontal. 
E) upward sloping.

Question 3

As price decreases along a linear demand curve,the price elasticity of demand decreases.

Accepted Answer

A) True 
 B)False

Question 4

Exhibit 5.3
  
-Refer to Exhibit 5.3,which shows a linear demand curve.Between points A and B,the demand is _____

Accepted Answer

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

Question 5

The ability of increasing quantity supplied in response to a higher price is identical across industries.

Accepted Answer

A) True 
 B)False

Question 6

The cross-price elasticity of demand is used to determine whether _____

Accepted Answer

A) a product is an inferior or a normal good. 
B) a product is a necessity or a luxury. 
C) two products are substitutes or complements. 
D) price and total revenue are directly or inversely related. 
E) the product's demand curve is linear. 
A) a product is an inferior or a normal good. 
B) a product is a necessity or a luxury. 
C) two products are substitutes or complements. 
D) price and total revenue are directly or inversely related. 
E) the product's demand curve is linear.

Question 7

If the price of Coca-Cola increases from 50 cents to 60 cents per can and the quantity demanded decreases from 100 cans to 50 cans,then the demand for Coca-Cola is _____

Accepted Answer

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

Question 8

The value of the cross-price elasticity of demand between golf balls and golf clubs is _____

Accepted Answer

A) negative. 
B) positive. 
C) zero. 
D) greater than 1 but less than 3. 
E) equal to 1. 
A) negative. 
B) positive. 
C) zero. 
D) greater than 1 but less than 3. 
E) equal to 1.

Question 9

The total revenue from selling trucks is equal to _____

Accepted Answer

A) the price of a truck times the quantity sold. 
B) the change in quantity sold divided by the change in price. 
C) average cost times the quantity produced. 
D) the price of a truck times the quantity produced. 
E) the price of a truck times the price elasticity of demand. 
A) the price of a truck times the quantity sold. 
B) the change in quantity sold divided by the change in price. 
C) average cost times the quantity produced. 
D) the price of a truck times the quantity produced. 
E) the price of a truck times the price elasticity of demand.

Question 10

If the cross-price elasticity of demand is −3,then _____

Accepted Answer

A) the goods are substitutes. 
B) the goods are unrelated. 
C) one of the two goods is an inferior good. 
D) one of the two goods is a luxury. 
E) the goods are complements. 
A) the goods are substitutes. 
B) the goods are unrelated. 
C) one of the two goods is an inferior good. 
D) one of the two goods is a luxury. 
E) the goods are complements.

Question 11

If quantity decreases by 15 percent when prices increase 5 percent,then elasticity for this product is _____

Accepted Answer

A) 15. 
B) 10. 
C) 5. 
D) 3. 
E) 1. 
A) 15. 
B) 10. 
C) 5. 
D) 3. 
E) 1.

Question 12

Demand for a necessity,such as food,is _____

Accepted Answer

A) both income and price inelastic. 
B) income inelastic and price elastic. 
C) income elastic and price inelastic. 
D) both income and price elastic. 
E) income elastic and perfectly price inelastic. 
A) both income and price inelastic. 
B) income inelastic and price elastic. 
C) income elastic and price inelastic. 
D) both income and price elastic. 
E) income elastic and perfectly price inelastic.

Question 13

Which of the following has the most elastic demand?

Accepted Answer

A) Post Raisin Bran cereal 
B) raisin bran cereal 
C) bran cereal. 
D) breakfast cereal. 
E) prescription drugs. 
A) Post Raisin Bran cereal 
B) raisin bran cereal 
C) bran cereal. 
D) breakfast cereal. 
E) prescription drugs.

Question 14

Which of the following has the least elastic demand?

Accepted Answer

A) Post Raisin Bran cereal 
B) Honey Nut Cheerios 
C) raisin bran cereal 
D) bran cereal 
E) breakfast cereal 
A) Post Raisin Bran cereal 
B) Honey Nut Cheerios 
C) raisin bran cereal 
D) bran cereal 
E) breakfast cereal

Question 15

Exhibit 5.7
  
-Refer to Exhibit 5.7,which shows four demand curves.If D(2)is the demand curve after a price increase,which demand curve best illustrates how consumers will respond to the change in price over one year?

Accepted Answer

A) curve D(1) 
B) curve D(2) 
C) curve D(4) 
D) curve D(3) 
E) curve D(1) or curve D(4) 
A) curve D(1) 
B) curve D(2) 
C) curve D(4) 
D) curve D(3) 
E) curve D(1) or curve D(4)

Question 16

The cross-price elasticity of demand measures the _____

Accepted Answer

A) elasticity of demand at the intersection of the supply and demand curves. 
B) elasticity of supply at the intersection of supply and demand curves. 
C) relative elasticity of supply and demand at the intersection of the two curves. 
D) relationship between the demand for one good and the price of another. 
E) relationship between the demand for one good and the supply of another. 
A) elasticity of demand at the intersection of the supply and demand curves. 
B) elasticity of supply at the intersection of supply and demand curves. 
C) relative elasticity of supply and demand at the intersection of the two curves. 
D) relationship between the demand for one good and the price of another. 
E) relationship between the demand for one good and the supply of another.

Question 17

If elasticity for a product is 2 and supply increases by 10 percent,what was the percent price change for this product?

Accepted Answer

A) an increase of 2 percent 
B) a decrease of 2 percent 
C) an increase of 10 percent 
D) a decrease of 5 percent 
E) an increase of 5 percent 
A) an increase of 2 percent 
B) a decrease of 2 percent 
C) an increase of 10 percent 
D) a decrease of 5 percent 
E) an increase of 5 percent

Question 18

Which of the following goods will have a higher price elasticity of demand?

Accepted Answer

A) a good with few substitutes 
B) a good with many substitutes 
C) a good that represents a small proportion of the consumer's budget 
D) a good that is broadly defined 
E) a good that is a necessity 
A) a good with few substitutes 
B) a good with many substitutes 
C) a good that represents a small proportion of the consumer's budget 
D) a good that is broadly defined 
E) a good that is a necessity

Question 19

The percentage change in the demand for film divided by the percentage change in the price of cameras indicates _____

Accepted Answer

A) the cross-price elasticity of demand between film and cameras. 
B) the cross-price elasticity of demand for photographs. 
C) the price elasticity of demand for film. 
D) the price elasticity of demand for cameras. 
E) the income elasticity of demand between film and camera. 
A) the cross-price elasticity of demand between film and cameras. 
B) the cross-price elasticity of demand for photographs. 
C) the price elasticity of demand for film. 
D) the price elasticity of demand for cameras. 
E) the income elasticity of demand between film and camera.

Question 20

Given the abundance of California oranges,the demand for Florida oranges will _____

Accepted Answer

A) be less elastic than if there were no California oranges. 
B) be more elastic than if there were no California oranges. 
C) be as elastic as it would have been had there been no California oranges. 
D) be perfectly elastic. 
E) be perfectly inelastic. 
A) be less elastic than if there were no California oranges. 
B) be more elastic than if there were no California oranges. 
C) be as elastic as it would have been had there been no California oranges. 
D) be perfectly elastic. 
E) be perfectly inelastic.

Exam 5: Elasticity of Demand and Supply

Exhibit 5.10 -Refer to Exhibit 5.10,which shows two upward-sloping linear supply curves that pass through the origin.Which supply curve is more elastic?

The supply curve for dorm rooms on a university campus is likely to be _____

As price decreases along a linear demand curve,the price elasticity of demand decreases.

Exhibit 5.3 -Refer to Exhibit 5.3,which shows a linear demand curve.Between points A and B,the demand is _____

The ability of increasing quantity supplied in response to a higher price is identical across industries.

The cross-price elasticity of demand is used to determine whether _____

If the price of Coca-Cola increases from 50 cents to 60 cents per can and the quantity demanded decreases from 100 cans to 50 cans,then the demand for Coca-Cola is _____

The value of the cross-price elasticity of demand between golf balls and golf clubs is _____

The total revenue from selling trucks is equal to _____

If the cross-price elasticity of demand is −3,then _____

If quantity decreases by 15 percent when prices increase 5 percent,then elasticity for this product is _____

Demand for a necessity,such as food,is _____

Which of the following has the most elastic demand?

Which of the following has the least elastic demand?

Exhibit 5.7 -Refer to Exhibit 5.7,which shows four demand curves.If D(2)is the demand curve after a price increase,which demand curve best illustrates how consumers will respond to the change in price over one year?

The cross-price elasticity of demand measures the _____

If elasticity for a product is 2 and supply increases by 10 percent,what was the percent price change for this product?

Which of the following goods will have a higher price elasticity of demand?

The percentage change in the demand for film divided by the percentage change in the price of cameras indicates _____

Given the abundance of California oranges,the demand for Florida oranges will _____

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