Question 1

A perfectly elastic supply curve

Accepted Answer

A)  has no relevance,since real-world supply curves are never perfectly elastic 
B)  is a horizontal straight line 
C)  is a vertical straight line 
D)  is an upward-sloping straight line 
E)  is not a straight line 
A)  has no relevance,since real-world supply curves are never perfectly elastic 
B)  is a horizontal straight line 
C)  is a vertical straight line 
D)  is an upward-sloping straight line 
E)  is not a straight line

Question 2

If the price elasticity of supply in the kiwi fruit industry equals 1,supply is

Accepted Answer

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

Question 3

Economists distinguish between normal and inferior goods using

Accepted Answer

A)  price elasticity of demand 
B)  price elasticity of supply 
C)  income elasticity of demand 
D)  cross-price elasticity of demand 
E)  tax incidence 
A)  price elasticity of demand 
B)  price elasticity of supply 
C)  income elasticity of demand 
D)  cross-price elasticity of demand 
E)  tax incidence

Question 4

If the price of Pepsi-Cola increases from 50 cents to 60 cents per can and the quantity demanded decreases from 100 cans to 50 cans,then the Pepsi-Cola Company could increase its total revenue by

Accepted Answer

A)  lowering price 
B)  decreasing quantity supplied 
C)  leaving price the same 
D)  raising price 
E)  decreasing supply 
A)  lowering price 
B)  decreasing quantity supplied 
C)  leaving price the same 
D)  raising price 
E)  decreasing supply

Question 5

John spends exactly the same dollar amount on candy bars each week,regardless of their price.John's demand curve for candy bars is

Accepted Answer

A)  upward-sloping 
B)  backward-bending 
C)  perfectly inelastic 
D)  perfectly elastic 
E)  unit elastic 
A)  upward-sloping 
B)  backward-bending 
C)  perfectly inelastic 
D)  perfectly elastic 
E)  unit elastic

Question 6

The price elasticity of demand helps determine the effect of price changes on a firm's

Accepted Answer

A)  property taxes 
B)  profits 
C)  quantity supplied 
D)  revenues 
E)  total costs 
A)  property taxes 
B)  profits 
C)  quantity supplied 
D)  revenues 
E)  total costs

Question 7

Exhibit 5-7
  
-Between points b and c in Exhibit 5-7,price decreases by $1,quantity demanded increases by 10,

Accepted Answer

A)  total revenue decreases by $1,and demand is elastic 
B)  total revenue decreases by $1,and demand is inelastic 
C)  total revenue increases by $40,and demand is elastic 
D)  total revenue increases by $40,and demand is inelastic 
E)  and total revenue increases by $80 
A)  total revenue decreases by $1,and demand is elastic 
B)  total revenue decreases by $1,and demand is inelastic 
C)  total revenue increases by $40,and demand is elastic 
D)  total revenue increases by $40,and demand is inelastic 
E)  and total revenue increases by $80

Question 8

Which of the following does not determine a good's price elasticity of demand?

Accepted Answer

A)  the time interval considered 
B)  the number of substitutes there are for the good 
C)  expenditures on the good as a percentage of the total consumer budget 
D)  the slope of the demand curve 
E)  the more of a luxury a particular good is 
A)  the time interval considered 
B)  the number of substitutes there are for the good 
C)  expenditures on the good as a percentage of the total consumer budget 
D)  the slope of the demand curve 
E)  the more of a luxury a particular good is

Question 9

If a $1 increase in price leads to a 3-unit decrease in quantity demanded,then demand must be elastic.

Accepted Answer

A) True 
 B)False

Question 10

If the price of Pepsi-Cola increases from 40 cents to 50 cents per can and the quantity demanded decreases from 100 cans to 50 cans,then,according to the midpoint formula,the value of price elasticity of demand for Pepsi-Cola is

Accepted Answer

A)  -0.5 
B)  -0.25 
C)  -1 
D)  -3 
E)  -2 
A)  -0.5 
B)  -0.25 
C)  -1 
D)  -3 
E)  -2

Question 11

Exhibit 5-17
  
-Use the information in Exhibit 5-17 to calculate the price elasticity of supply for restaurant meals.

Accepted Answer

A)  7/1 
B)  2 
C)  1/2 
D)  3/5 
E)  5/3 
A)  7/1 
B)  2 
C)  1/2 
D)  3/5 
E)  5/3

Question 12

A demand curve that is unit elastic everywhere is

Accepted Answer

A)  linear and slopes downward 
B)  linear and slopes upward 
C)  vertical 
D)  horizontal 
E)  nonlinear 
A)  linear and slopes downward 
B)  linear and slopes upward 
C)  vertical 
D)  horizontal 
E)  nonlinear

Question 13

If there is no change in equilibrium price after a $1 per unit tax is imposed on suppliers,demand must be perfectly inelastic.

Accepted Answer

A) True 
 B)False

Question 14

Some demand curves have constant elasticity everywhere.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A)  demand is elastic 
B)  demand is inelastic 
C)  demand is unit elastic 
D)  supply is elastic 
E)  supply is inelastic 
A)  demand is elastic 
B)  demand is inelastic 
C)  demand is unit elastic 
D)  supply is elastic 
E)  supply is inelastic

Question 16

A successful advertising campaign would likely

Accepted Answer

A)  increase price elasticity of demand by stressing the uniqueness of the product 
B)  reduce price elasticity of demand by stressing the uniqueness of the product 
C)  reduce price elasticity of demand by informing consumers of the availability of substitutes 
D)  not alter the demand curve 
E)  generally make the demand curve shift inward 
A)  increase price elasticity of demand by stressing the uniqueness of the product 
B)  reduce price elasticity of demand by stressing the uniqueness of the product 
C)  reduce price elasticity of demand by informing consumers of the availability of substitutes 
D)  not alter the demand curve 
E)  generally make the demand curve shift inward

Question 17

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

Accepted Answer

A)  negative 
B)  positive 
C)  0 
D)  greater than 1 
E)  less than 1 
A)  negative 
B)  positive 
C)  0 
D)  greater than 1 
E)  less than 1

Question 18

If demand is elastic,a decrease in price leads to a decrease in total revenue.

Accepted Answer

A) True 
 B)False

Question 19

If price elasticity of demand is -0.5,

Accepted Answer

A)  a 1% decrease in quantity demanded leads to a 0.5% decrease in price 
B)  a 1% decrease in price leads to a 0.5% increase in quantity demanded 
C)  a 50% decrease in price leads to a 1% increase in quantity demanded 
D)  a 50% decrease in price leads to a 100% increase in quantity demanded 
E)  demand is elastic 
A)  a 1% decrease in quantity demanded leads to a 0.5% decrease in price 
B)  a 1% decrease in price leads to a 0.5% increase in quantity demanded 
C)  a 50% decrease in price leads to a 1% increase in quantity demanded 
D)  a 50% decrease in price leads to a 100% increase in quantity demanded 
E)  demand is elastic

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 5: Elasticity of Demand and Supply

A perfectly elastic supply curve

If the price elasticity of supply in the kiwi fruit industry equals 1,supply is

Economists distinguish between normal and inferior goods using

If the price of Pepsi-Cola increases from 50 cents to 60 cents per can and the quantity demanded decreases from 100 cans to 50 cans,then the Pepsi-Cola Company could increase its total revenue by

John spends exactly the same dollar amount on candy bars each week,regardless of their price.John's demand curve for candy bars is

The price elasticity of demand helps determine the effect of price changes on a firm's

Exhibit 5-7 -Between points b and c in Exhibit 5-7,price decreases by $1,quantity demanded increases by 10,

Which of the following does not determine a good's price elasticity of demand?

If a $1 increase in price leads to a 3-unit decrease in quantity demanded,then demand must be elastic.

If the price of Pepsi-Cola increases from 40 cents to 50 cents per can and the quantity demanded decreases from 100 cans to 50 cans,then,according to the midpoint formula,the value of price elasticity of demand for Pepsi-Cola is

Exhibit 5-17 -Use the information in Exhibit 5-17 to calculate the price elasticity of supply for restaurant meals.

A demand curve that is unit elastic everywhere is

If there is no change in equilibrium price after a $1 per unit tax is imposed on suppliers,demand must be perfectly inelastic.

Some demand curves have constant elasticity everywhere.

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

A successful advertising campaign would likely

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

If demand is elastic,a decrease in price leads to a decrease in total revenue.

If price elasticity of demand is -0.5,

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

The Art and Science of Economic Analysis

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Economic Decision Makers

Demand, supply, and Markets

Consumer Choice and Demand

Production and Cost in the Firm

Perfect Competition

Amonopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, interest, and Corporate Finance

Transaction Costs, imperfect Information, and Market Behavior

Economic Regulation and Antitrust Policy

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Externalities and the Environment

Income Distribution and Poverty

International Trade

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Developing and Transitional Economies

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