Question 1

The midpoint method is used to compute elasticity because it

Accepted Answer

A)  automatically computes a positive number instead of a negative number. 
B)  results in an elasticity that is the same as the slope of the demand curve. 
C)  gives the same answer regardless of the direction of change. 
D)  automatically rounds quantities to the nearest whole unit. 
A)  automatically computes a positive number instead of a negative number. 
B)  results in an elasticity that is the same as the slope of the demand curve. 
C)  gives the same answer regardless of the direction of change. 
D)  automatically rounds quantities to the nearest whole unit.

Question 2

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

Accepted Answer

A)  0.29. 
B)  0.54. 
C)  1.86. 
D)  2.0. 
A)  0.29. 
B)  0.54. 
C)  1.86. 
D)  2.0.

Question 3

If the cross-price elasticity of two goods is positive, then the two goods are

Accepted Answer

A)  substitutes. 
B)  complements. 
C)  normal goods. 
D)  inferior goods. 
A)  substitutes. 
B)  complements. 
C)  normal goods. 
D)  inferior goods.

Question 4

If marijuana were legalized, it is likely that there would be an increase in the supply of marijuana. Advocates of marijuana legalization argue that this would significantly reduce the amount of revenue going to the criminal organizations that currently supply marijuana. These advocates believe that the

Accepted Answer

A)  supply for marijuana is elastic. 
B)  demand for marijuana is elastic. 
C)  supply for marijuana is inelastic. 
D)  demand for marijuana is inelastic. 
A)  supply for marijuana is elastic. 
B)  demand for marijuana is elastic. 
C)  supply for marijuana is inelastic. 
D)  demand for marijuana is inelastic.

Question 5

Table 5-2
  
-Refer to Table 5-2. Using the midpoint method, if the price falls from $200 to $150, the price elasticity of demand is

Accepted Answer

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

Question 6

Figure 5-8  
-Refer to Figure 5-8. When price falls from $25 to $20, demand is

Accepted Answer

A)  inelastic, since total revenue decreases from $4,000 to $2,500. 
B)  inelastic, since total revenue increases from $2,500 to $4,000. 
C)  elastic, since total revenue increases from $2,500 to $4,000. 
D)  unit elastic, since total revenue does not change. 
A)  inelastic, since total revenue decreases from $4,000 to $2,500. 
B)  inelastic, since total revenue increases from $2,500 to $4,000. 
C)  elastic, since total revenue increases from $2,500 to $4,000. 
D)  unit elastic, since total revenue does not change.

Question 7

Using the midpoint method, the price elasticity of demand for a good is computed to be approximately 2. Which of the following events is consistent with a 0.1 percent increase in the price of the good?

Accepted Answer

A)  The quantity of the good demanded decreases from 250 to 150. 
B)  The quantity of the good demanded decreases from 200 to 100. 
C)  The quantity of the good demanded decreases by 0.05 percent. 
D)  The quantity of the good demanded decreases by 0.2 percent. 
A)  The quantity of the good demanded decreases from 250 to 150. 
B)  The quantity of the good demanded decreases from 200 to 100. 
C)  The quantity of the good demanded decreases by 0.05 percent. 
D)  The quantity of the good demanded decreases by 0.2 percent.

Question 8

Suppose demand is given by the equation:   Using the midpoint method, what is the price elasticity of demand between $1 and $2?

Accepted Answer

The price

Question 9

If the price elasticity of supply is 0.4, and a price increase led to a 5% increase in quantity supplied, then the price increase is about

Accepted Answer

A)  0.25%. 
B)  1.2%. 
C)  2%. 
D)  12.5%. 
A)  0.25%. 
B)  1.2%. 
C)  2%. 
D)  12.5%.

Question 10

Table 5-5
  
-Refer to Table 5-5. Demand is unit elastic when quantity demanded changes from

Accepted Answer

A)  9 to 8. 
B)  10 to 9. 
C)  10 to 11. 
D)  There is not enough information given to determine the correct answer. 
A)  9 to 8. 
B)  10 to 9. 
C)  10 to 11. 
D)  There is not enough information given to determine the correct answer.

Question 11

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 $5,000, what is the price elasticity of demand between $8 and $12?

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 12

How does total revenue change as one moves downward and to the right along a linear demand curve?

Accepted Answer

A)  It always increases. 
B)  It always decreases. 
C)  It first increases, then decreases. 
D)  It is unaffected by a movement along the demand curve. 
A)  It always increases. 
B)  It always decreases. 
C)  It first increases, then decreases. 
D)  It is unaffected by a movement along the demand curve.

Question 13

If the price elasticity of demand for a good is 5, then a 10 percent increase in price results in a

Accepted Answer

A)  0.5 percent decrease in the quantity demanded. 
B)  2 percent decrease in the quantity demanded. 
C)  5 percent decrease in the quantity demanded. 
D)  50 percent decrease in the quantity demanded. 
A)  0.5 percent decrease in the quantity demanded. 
B)  2 percent decrease in the quantity demanded. 
C)  5 percent decrease in the quantity demanded. 
D)  50 percent decrease in the quantity demanded.

Question 14

The production of methamphetamine meth) is a social problem in the Midwest. Iowa is considering two potential programs: Operation Methbust would increase the number of sheriffs' deputies to search out and destroy methamphetamine labs. Operation Say No to Meth would increase the training required of public school teachers so that they could better educate students about the health risks of using meth. Assuming that each program were successful, which of the following statements is correct?

Accepted Answer

A)  Both Operation Methbust and Say No would reduce the equilibrium quantity and increase the equilibrium price of meth. 
B)  Both Operation Methbust and Say No would increase the equilibrium quantity and reduce the equilibrium price of meth. 
C)  Both Operation Methbust and Say No would reduce the equilibrium quantity of meth; Operation Methbust would increase the equilibrium price, whereas Say No would reduce the equilibrium price of meth. 
D)  Both Operation Methbust and Say No would reduce the equilibrium price of meth; Operation Methbust would reduce the equilibrium quantity, whereas Say No would increase the equilibrium quantity of meth. 
A)  Both Operation Methbust and Say No would reduce the equilibrium quantity and increase the equilibrium price of meth. 
B)  Both Operation Methbust and Say No would increase the equilibrium quantity and reduce the equilibrium price of meth. 
C)  Both Operation Methbust and Say No would reduce the equilibrium quantity of meth; Operation Methbust would increase the equilibrium price, whereas Say No would reduce the equilibrium price of meth. 
D)  Both Operation Methbust and Say No would reduce the equilibrium price of meth; Operation Methbust would reduce the equilibrium quantity, whereas Say No would increase the equilibrium quantity of meth.

Question 15

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. Using the midpoint method, if the price of good Y is $10 and the price of good X decreases from $5 to $3, what is the price elasticity of demand for good X? Is the demand elastic, unitary elastic, or inelastic?

Accepted Answer

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

Question 16

Scenario 5-3
Suppose that the supply of aged cheddar cheese is inelastic, and the supply of bread is elastic. Both goods are considered to be normal goods by a majority of consumers. Suppose that a large income tax increase decreases the demand for both goods by 10%.
-Refer to Scenario 5-3. The price elasticity of supply for bread could be

Accepted Answer

A)  -1. 
B)  0. 
C)  0.5. 
D)  1.5. 
A)  -1. 
B)  0. 
C)  0.5. 
D)  1.5.

Question 17

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 18

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

Accepted Answer

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

Question 19

If the price elasticity of demand for apples is 0.8, then a 2.4% increase in the price of apples will decrease the quantity demanded of apples by

Accepted Answer

A)  1.92%, and apples sellers' total revenue will increase as a result. 
B)  1.92%, and apples sellers' total revenue will decrease as a result. 
C)  3%, and apples sellers' total revenue will increase as a result. 
D)  3%, and apples sellers' total revenue will decrease as a result. 
A)  1.92%, and apples sellers' total revenue will increase as a result. 
B)  1.92%, and apples sellers' total revenue will decrease as a result. 
C)  3%, and apples sellers' total revenue will increase as a result. 
D)  3%, and apples sellers' total revenue will decrease as a result.

Question 20

-Refer to Table 5-12. Using the midpoint method, what is the price elasticity of demand between $6 and $8?

Accepted Answer

The price

The midpoint method is used to compute elasticity because it

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

If the cross-price elasticity of two goods is positive, then the two goods are

Table 5-2 -Refer to Table 5-2. Using the midpoint method, if the price falls from $200 to $150, the price elasticity of demand is

Figure 5-8 -Refer to Figure 5-8. When price falls from $25 to $20, demand is

Using the midpoint method, the price elasticity of demand for a good is computed to be approximately 2. Which of the following events is consistent with a 0.1 percent increase in the price of the good?

Suppose demand is given by the equation: Using the midpoint method, what is the price elasticity of demand between $1 and $2?

If the price elasticity of supply is 0.4, and a price increase led to a 5% increase in quantity supplied, then the price increase is about

Table 5-5 -Refer to Table 5-5. Demand is unit elastic when quantity demanded changes from

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 $5,000, what is the price elasticity of demand between $8 and $12?

How does total revenue change as one moves downward and to the right along a linear demand curve?

If the price elasticity of demand for a good is 5, then a 10 percent increase in price results in a

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

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

If the price elasticity of demand for apples is 0.8, then a 2.4% increase in the price of apples will decrease the quantity demanded of apples by

-Refer to Table 5-12. Using the midpoint method, what is the price elasticity of demand between $6 and $8?

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

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

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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Exam 5: Elasticity and Its Application

The midpoint method is used to compute elasticity because it

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

If the cross-price elasticity of two goods is positive, then the two goods are

Table 5-2 -Refer to Table 5-2. Using the midpoint method, if the price falls from $200 to $150, the price elasticity of demand is

Figure 5-8 -Refer to Figure 5-8. When price falls from $25 to $20, demand is

Using the midpoint method, the price elasticity of demand for a good is computed to be approximately 2. Which of the following events is consistent with a 0.1 percent increase in the price of the good?

Suppose demand is given by the equation: Using the midpoint method, what is the price elasticity of demand between $1 and $2?

If the price elasticity of supply is 0.4, and a price increase led to a 5% increase in quantity supplied, then the price increase is about

Table 5-5 -Refer to Table 5-5. Demand is unit elastic when quantity demanded changes from

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 $5,000, what is the price elasticity of demand between $8 and $12?

How does total revenue change as one moves downward and to the right along a linear demand curve?

If the price elasticity of demand for a good is 5, then a 10 percent increase in price results in a

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

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

If the price elasticity of demand for apples is 0.8, then a 2.4% increase in the price of apples will decrease the quantity demanded of apples by

-Refer to Table 5-12. Using the midpoint method, what is the price elasticity of demand between $6 and $8?

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

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

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters