Question 1

Figure 5-15  
-Refer to Figure 5-15. Using the midpoint method, what is the price elasticity of supply between points C and D?

Accepted Answer

A)  0.21 
B)  0.29 
C)  0.73 
D)  1.36 
A)  0.21 
B)  0.29 
C)  0.73 
D)  1.36

Question 2

On a certain supply curve, one point is quantity supplied = 200, price = $2.00) and another point is quantity supplied= 250, price = $2.50). Using the midpoint method, the price elasticity of supply is about

Accepted Answer

A)  0.2. 
B)  0.5. 
C)  1.0. 
D)  2.5. 
A)  0.2. 
B)  0.5. 
C)  1.0. 
D)  2.5.

Question 3

Which of the following statements is correct?

Accepted Answer

A)  The demand for natural gas is more elastic over a short period of time than over a long period of time. 
B)  The demand for smoke alarms is more elastic than the demand for Persian rugs. 
C)  The demand for bourbon whiskey is more elastic than the demand for alcoholic beverages in general. 
D)  All of the above are correct. 
A)  The demand for natural gas is more elastic over a short period of time than over a long period of time. 
B)  The demand for smoke alarms is more elastic than the demand for Persian rugs. 
C)  The demand for bourbon whiskey is more elastic than the demand for alcoholic beverages in general. 
D)  All of the above are correct.

Question 4

When the price of chai tea lattés is $5, Maxine buys 20 per month. When the price is $4, she buys 30 per month. Maxine's demand for chai tea lattés is

Accepted Answer

A)  elastic, and her demand curve would be relatively flat. 
B)  elastic, and her demand curve would be relatively steep. 
C)  inelastic, and her demand curve would be relatively flat. 
D)  inelastic, and her demand curve would be relatively steep. 
A)  elastic, and her demand curve would be relatively flat. 
B)  elastic, and her demand curve would be relatively steep. 
C)  inelastic, and her demand curve would be relatively flat. 
D)  inelastic, and her demand curve would be relatively steep.

Question 5

On a certain supply curve, one point is quantity supplied = 200, price = $4.00) and another point is quantity supplied = 250, price = $4.50). Using the midpoint method, the price elasticity of supply is about

Accepted Answer

A)  0.22. 
B)  0.53. 
C)  1.00. 
D)  1.89. 
A)  0.22. 
B)  0.53. 
C)  1.00. 
D)  1.89.

Question 6

If the quantity supplied responds only slightly to changes in price, then

Accepted Answer

A)  supply is said to be elastic. 
B)  supply is said to be inelastic. 
C)  an increase in price will not shift the supply curve very much. 
D)  even a large decrease in demand will change the equilibrium price only slightly. 
A)  supply is said to be elastic. 
B)  supply is said to be inelastic. 
C)  an increase in price will not shift the supply curve very much. 
D)  even a large decrease in demand will change the equilibrium price only slightly.

Question 7

Which of the following statements about the price elasticity of demand is correct?

Accepted Answer

A)  The price elasticity of demand for a good measures the willingness of buyers of the good to buy less of the good as its price increases. 
B)  Price elasticity of demand reflects the many economic, psychological, and social forces that shape consumer tastes. 
C)  Other things equal, if good x has close substitutes and good y does not have close substitutes, then the demand for good x will be more elastic than the demand for good y. 
D)  All of the above are correct. 
A)  The price elasticity of demand for a good measures the willingness of buyers of the good to buy less of the good as its price increases. 
B)  Price elasticity of demand reflects the many economic, psychological, and social forces that shape consumer tastes. 
C)  Other things equal, if good x has close substitutes and good y does not have close substitutes, then the demand for good x will be more elastic than the demand for good y. 
D)  All of the above are correct.

Question 8

-Refer to Table 5-12. Between which two quantities listed is demand most elastic?

Accepted Answer

The answer of  
-Refer to Table 5-12. Between which...

Question 9

Scenario 5-7
Suppose the demand function for good X is given by:   where   is the quantity demanded of good X,   is the price of good X, and   is the price of good Y, which is related to good X.
-Refer to Scenario 5-7. Good X and Good Y are related as

Accepted Answer

The answer of Scenario 5-7
Suppose the demand function for good...

Question 10

While in college, John and Bethany each buy five packages of mac-n-cheese per week. After they graduate and have full-time jobs, John buys six packages per week, but Bethany buys only two packages per week. When looking at income elasticity of demand for mac­n­cheese, John's

Accepted Answer

A)  is negative, and Bethany's is positive. 
B)  is positive, and Bethany's is negative. 
C)  is zero, and Bethany's approaches infinity. 
D)  approaches infinity, and Bethany's is zero. 
A)  is negative, and Bethany's is positive. 
B)  is positive, and Bethany's is negative. 
C)  is zero, and Bethany's approaches infinity. 
D)  approaches infinity, and Bethany's is zero.

Question 11

If the price elasticity of demand for a good is 6, then a 3 percent decrease in price results in

Accepted Answer

A)  a 20 percent increase in the quantity demanded. 
B)  an 18 percent increase in the quantity demanded. 
C)  a 2 percent increase in the quantity demanded. 
D)  a 1.8 percent increase in the quantity demanded. 
A)  a 20 percent increase in the quantity demanded. 
B)  an 18 percent increase in the quantity demanded. 
C)  a 2 percent increase in the quantity demanded. 
D)  a 1.8 percent increase in the quantity demanded.

Question 12

Price elasticity of demand along a linear, downward-sloping demand curve decreases as price falls.

Accepted Answer

A) True 
 B)False

Question 13

Figure 5-6  
-Refer to Figure 5-6. For prices above $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 14

Figure 5-9  
-Refer to Figure 5-9. Using the midpoint method, the price elasticity of demand between point A and point B is

Accepted Answer

A)  0.33. 
B)  0.5. 
C)  2.0. 
D)  3.0. 
A)  0.33. 
B)  0.5. 
C)  2.0. 
D)  3.0.

Question 15

The midpoint method for calculating elasticities is convenient in that it allows us to

Accepted Answer

A)  ignore the percentage change in quantity demanded and instead focus entirely on the percentage change in price. 
B)  calculate the same value for the elasticity, regardless of whether the price increases or decreases. 
C)  assume that sellers' total revenue stays constant when the price changes. 
D)  restrict all elasticity values to between 0 and 1. 
A)  ignore the percentage change in quantity demanded and instead focus entirely on the percentage change in price. 
B)  calculate the same value for the elasticity, regardless of whether the price increases or decreases. 
C)  assume that sellers' total revenue stays constant when the price changes. 
D)  restrict all elasticity values to between 0 and 1.

Question 16

Suppose a freeze in Florida significantly reduces the supply of oranges this year. As a result, would you expect the total revenue from the sale of orange juice to rise or fall? Explain.

Accepted Answer

Since oranges are an input into the prod

Question 17

Other things equal, the demand for a good tends to be more inelastic, the

Accepted Answer

A)  fewer the available substitutes. 
B)  longer the time period considered. 
C)  more the good is considered a luxury good. 
D)  more narrowly defined is the market for the good. 
A)  fewer the available substitutes. 
B)  longer the time period considered. 
C)  more the good is considered a luxury good. 
D)  more narrowly defined is the market for the good.

Question 18

When the price of candy bars is $1.00, the quantity demanded is 500 per day. When the price falls to $0.80, the quantity demanded increases to 600. Given this information and using the midpoint method, we know that the demand for candy bars is

Accepted Answer

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

Question 19

Suppose that when the price of good X falls from $6 to $4, the quantity demanded of good Y rises from 30 units to 40 units. Using the midpoint method, the cross-price elasticity of demand is

Accepted Answer

A)  -0.71, and X and Y are complements. 
B)  -1.40, and X and Y are complements. 
C)  -0.71, and X and Y are substitutes. 
D)  -1.40, and X and Y are substitutes. 
A)  -0.71, and X and Y are complements. 
B)  -1.40, and X and Y are complements. 
C)  -0.71, and X and Y are substitutes. 
D)  -1.40, and X and Y are substitutes.

Question 20

Table 5-9
  
-Refer to Table 5-9. Along which of the supply curves does quantity supplied move proportionately more than the price?

Accepted Answer

A)  along supply curve B only 
B)  along supply curves B and C 
C)  along all three supply curves 
D)  None. Quantity supplied moves proportionately less than the price along all of the three supply curves. 
A)  along supply curve B only 
B)  along supply curves B and C 
C)  along all three supply curves 
D)  None. Quantity supplied moves proportionately less than the price along all of the three supply curves.

Exam 5: Elasticity and Its Application

Figure 5-15 -Refer to Figure 5-15. Using the midpoint method, what is the price elasticity of supply between points C and D?

On a certain supply curve, one point is quantity supplied = 200, price = $2.00) and another point is quantity supplied= 250, price = $2.50). Using the midpoint method, the price elasticity of supply is about

Which of the following statements is correct?

When the price of chai tea lattés is $5, Maxine buys 20 per month. When the price is $4, she buys 30 per month. Maxine's demand for chai tea lattés is

On a certain supply curve, one point is quantity supplied = 200, price = $4.00) and another point is quantity supplied = 250, price = $4.50). Using the midpoint method, the price elasticity of supply is about

If the quantity supplied responds only slightly to changes in price, then

Which of the following statements about the price elasticity of demand is correct?

-Refer to Table 5-12. Between which two quantities listed is demand most elastic?

Scenario 5-7 Suppose the demand function for good X is given by: where is the quantity demanded of good X, is the price of good X, and is the price of good Y, which is related to good X. -Refer to Scenario 5-7. Good X and Good Y are related as

While in college, John and Bethany each buy five packages of mac-n-cheese per week. After they graduate and have full-time jobs, John buys six packages per week, but Bethany buys only two packages per week. When looking at income elasticity of demand for mac­n­cheese, John's

If the price elasticity of demand for a good is 6, then a 3 percent decrease in price results in

Price elasticity of demand along a linear, downward-sloping demand curve decreases as price falls.

Figure 5-6 -Refer to Figure 5-6. For prices above $8, demand is price

Figure 5-9 -Refer to Figure 5-9. Using the midpoint method, the price elasticity of demand between point A and point B is

The midpoint method for calculating elasticities is convenient in that it allows us to

Suppose a freeze in Florida significantly reduces the supply of oranges this year. As a result, would you expect the total revenue from the sale of orange juice to rise or fall? Explain.

Other things equal, the demand for a good tends to be more inelastic, the

When the price of candy bars is $1.00, the quantity demanded is 500 per day. When the price falls to $0.80, the quantity demanded increases to 600. Given this information and using the midpoint method, we know that the demand for candy bars is

Suppose that when the price of good X falls from $6 to $4, the quantity demanded of good Y rises from 30 units to 40 units. Using the midpoint method, the cross-price elasticity of demand is

Table 5-9 -Refer to Table 5-9. Along which of the supply curves does quantity supplied move proportionately more than the price?

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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While in college, John and Bethany each buy five packages of mac-n-cheese per week. After they graduate and have full-time jobs, John buys six packages per week, but Bethany buys only two packages per week. When looking at income elasticity of demand for macncheese, John's