Question 1

Figure 5-15  
-Refer to Figure 5-15. Along which of these segments of the supply curve is supply most elastic?

Accepted Answer

A)  AB 
B)  CD 
C)  DH 
D)  GH 
A)  AB 
B)  CD 
C)  DH 
D)  GH

Question 2

For which of the following goods is the income elasticity of demand likely lowest?

Accepted Answer

A)  subscriptions to premium movie channels through the local cable television provider 
B)  hi-definition DVD players 
C)  champagne 
D)  housing 
A)  subscriptions to premium movie channels through the local cable television provider 
B)  hi-definition DVD players 
C)  champagne 
D)  housing

Question 3

If marijuana were legalized, it is likely that there would be an increase in the demand for marijuana. If demand for marijuana is inelastic and the supply of marijuana is perfectly elastic, this will result in

Accepted Answer

A)  higher prices and higher total revenue from marijuana sales. 
B)  higher prices but lower total revenue from marijuana sales. 
C)  the same price and higher total revenue from marijuana sales. 
D)  the same price but lower total revenue from marijuana sales. 
A)  higher prices and higher total revenue from marijuana sales. 
B)  higher prices but lower total revenue from marijuana sales. 
C)  the same price and higher total revenue from marijuana sales. 
D)  the same price but lower total revenue from marijuana sales.

Question 4

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

Accepted Answer

A)  clothing 
B)  blue jeans 
C)  Tommy Hilfiger jeans 
D)  All three would have the same elasticity of demand because they are all related. 
A)  clothing 
B)  blue jeans 
C)  Tommy Hilfiger jeans 
D)  All three would have the same elasticity of demand because they are all related.

Question 5

Marcus says that he would smoke one pack of cigarettes each day regardless of the price. If he is telling the truth, Marcus's

Accepted Answer

A)  demand for cigarettes is perfectly inelastic. 
B)  price elasticity of demand for cigarettes is infinite. 
C)  income elasticity of demand for cigarettes is 0. 
D)  More than one of the above is correct. 
A)  demand for cigarettes is perfectly inelastic. 
B)  price elasticity of demand for cigarettes is infinite. 
C)  income elasticity of demand for cigarettes is 0. 
D)  More than one of the above is correct.

Question 6

Suppose that quantity demand rises by 10% as a result of a 15% decrease in price. The price elasticity of demand for this good is

Accepted Answer

A)  inelastic and equal to 0.67. 
B)  elastic and equal to 0.67. 
C)  inelastic and equal to 1.50. 
D)  elastic and equal to 1.50. 
A)  inelastic and equal to 0.67. 
B)  elastic and equal to 0.67. 
C)  inelastic and equal to 1.50. 
D)  elastic and equal to 1.50.

Question 7

If the cross-price elasticity of demand between two goods is negative, what is the relationship between the two goods?

Accepted Answer

The goods

Question 8

Table 5-7
The following table shows a portion of the demand schedule for a particular good at various levels of income.
  
-Refer to Table 5-7. Using the midpoint method, when income equals $7,500, what is the price elasticity of demand between $16 and $20?

Accepted Answer

A)  0.56 
B)  0.75 
C)  1.33 
D)  1.80 
A)  0.56 
B)  0.75 
C)  1.33 
D)  1.80

Question 9

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 10

At price of $1.30 per pound, a local apple orchard is willing to supply 150 pounds of apples per day. At a price of $1.50 per pound, the orchard is willing to supply 170 pounds of apples per day. Using the midpoint method, the price elasticity of supply is about

Accepted Answer

A)  1.14. 
B)  1.00. 
C)  0.875. 
D)  0.50. 
A)  1.14. 
B)  1.00. 
C)  0.875. 
D)  0.50.

Question 11

If a supply curve is perfectly vertical, what is the value of the price elasticity of supply?

Accepted Answer

The answer of If a supply curve is perfectly vertical,...

Question 12

Which of the following could be the cross-price elasticity of demand for two goods that are complements?

Accepted Answer

A)  -1.3 
B)  0 
C)  0.2 
D)  1.4 
A)  -1.3 
B)  0 
C)  0.2 
D)  1.4

Question 13

Figure 5-12  
-Refer to Figure 5-12. Which of the following price changes would result in no change in sellers' total revenue?

Accepted Answer

A)  The price increases from $15 to $21. 
B)  The price increases from $18 to $21. 
C)  The price decreases from $24 to $18. 
D)  The price decreases from $27 to $24. 
A)  The price increases from $15 to $21. 
B)  The price increases from $18 to $21. 
C)  The price decreases from $24 to $18. 
D)  The price decreases from $27 to $24.

Question 14

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

Accepted Answer

A)  2.33 
B)  1.0 
C)  0.43 
D)  0.1 
A)  2.33 
B)  1.0 
C)  0.43 
D)  0.1

Question 15

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

Accepted Answer

A)  tablet computers 
B)  leather boots 
C)  lightbulbs 
D)  optional textbooks 
A)  tablet computers 
B)  leather boots 
C)  lightbulbs 
D)  optional textbooks

Question 16

Which of the following expressions is valid for the price elasticity of demand?

Accepted Answer

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

Question 17

Frequently, in the short run, the quantity supplied of a good is

Accepted Answer

A)  impossible, or nearly impossible, to measure. 
B)  not very responsive to price changes. 
C)  determined by the quantity demanded of the good. 
D)  determined by psychological forces and other non-economic forces. 
A)  impossible, or nearly impossible, to measure. 
B)  not very responsive to price changes. 
C)  determined by the quantity demanded of the good. 
D)  determined by psychological forces and other non-economic forces.

Question 18

Suppose that 50 ice cream cones are demanded at a particular price. If the price of ice cream cones rises from that price by 4 percent, the number of ice cream cones demanded falls to 46. Using the midpoint approach to calculate the price elasticity of demand, it follows that the

Accepted Answer

A)  demand for ice cream cones in this price range is elastic. 
B)  demand for ice cream cones in this price range is inelastic. 
C)  demand for ice cream cones in this price range is unit elastic. 
D)  price elasticity of demand for ice cream cones in this price range is 0. 
A)  demand for ice cream cones in this price range is elastic. 
B)  demand for ice cream cones in this price range is inelastic. 
C)  demand for ice cream cones in this price range is unit elastic. 
D)  price elasticity of demand for ice cream cones in this price range is 0.

Question 19

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 20

If a 30 percent change in price causes a 15 percent change in quantity supplied, then the price elasticity of supply is about

Accepted Answer

A)  0.5, and supply is elastic. 
B)  0.5, and supply is inelastic. 
C)  2, and supply is inelastic. 
D)  2, and supply is elastic. 
A)  0.5, and supply is elastic. 
B)  0.5, and supply is inelastic. 
C)  2, and supply is inelastic. 
D)  2, and supply is elastic.

Exam 5: Elasticity and Its Application

Figure 5-15 -Refer to Figure 5-15. Along which of these segments of the supply curve is supply most elastic?

For which of the following goods is the income elasticity of demand likely lowest?

If marijuana were legalized, it is likely that there would be an increase in the demand for marijuana. If demand for marijuana is inelastic and the supply of marijuana is perfectly elastic, this will result in

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

Marcus says that he would smoke one pack of cigarettes each day regardless of the price. If he is telling the truth, Marcus's

Suppose that quantity demand rises by 10% as a result of a 15% decrease in price. The price elasticity of demand for this good is

If the cross-price elasticity of demand between two goods is negative, what is the relationship between the two goods?

Table 5-7 The following table shows a portion of the demand schedule for a particular good at various levels of income. -Refer to Table 5-7. Using the midpoint method, when income equals $7,500, what is the price elasticity of demand between $16 and $20?

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

At price of $1.30 per pound, a local apple orchard is willing to supply 150 pounds of apples per day. At a price of $1.50 per pound, the orchard is willing to supply 170 pounds of apples per day. Using the midpoint method, the price elasticity of supply is about

If a supply curve is perfectly vertical, what is the value of the price elasticity of supply?

Which of the following could be the cross-price elasticity of demand for two goods that are complements?

Figure 5-12 -Refer to Figure 5-12. Which of the following price changes would result in no change in sellers' total revenue?

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

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

Which of the following expressions is valid for the price elasticity of demand?

Frequently, in the short run, the quantity supplied of a good is

Suppose that 50 ice cream cones are demanded at a particular price. If the price of ice cream cones rises from that price by 4 percent, the number of ice cream cones demanded falls to 46. Using the midpoint approach to calculate the price elasticity of demand, it follows that the

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

If a 30 percent change in price causes a 15 percent change in quantity supplied, then the price elasticity of supply is about

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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