Question 1

The measure of how willing consumers are to buy less of a good as its price rises is called

Accepted Answer

price elas

Question 2

Measures of elasticity enhance our ability to study the magnitudes of changes in quantities in response to changes in prices or income.

Accepted Answer

A) True 
 B)False

Question 3

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, at a price of $12, what is the income elasticity of demand when income rises from $5,000 to $10,000?

Accepted Answer

A)  0.00 
B)  0.41 
C)  1.00 
D)  2.45 
A)  0.00 
B)  0.41 
C)  1.00 
D)  2.45

Question 4

If we observe that when the price of chocolate decreases by 10%, quantity demanded increases by 25%, then the demand for chocolate is price elastic.

Accepted Answer

A) True 
 B)False

Question 5

Figure 5-4  
-Refer to Figure 5-4. Assume the section of the demand curve from A to B corresponds to prices between $6 and $12. Then, when the price increases from $8 to $10,

Accepted Answer

A)  the percent decrease in the quantity demanded exceeds the percent increase in the price. 
B)  the percent increase in the price exceeds the percent decrease in the quantity demanded. 
C)  sellers' total revenue increases as a result. 
D)  it is possible that the quantity demanded fell from 550 to 500 as a result. 
A)  the percent decrease in the quantity demanded exceeds the percent increase in the price. 
B)  the percent increase in the price exceeds the percent decrease in the quantity demanded. 
C)  sellers' total revenue increases as a result. 
D)  it is possible that the quantity demanded fell from 550 to 500 as a result.

Question 6

When studying how some event or policy affects a market, elasticity provides information on the

Accepted Answer

A)  change in the costs of production. 
B)  tradeoff between equality and efficiency. 
C)  effect on the budget deficit or surplus. 
D)  direction and magnitude of the effect. 
A)  change in the costs of production. 
B)  tradeoff between equality and efficiency. 
C)  effect on the budget deficit or surplus. 
D)  direction and magnitude of the effect.

Question 7

Cross-price elasticity of demand measures how the quantity demanded of one good changes as the price of another good changes.

Accepted Answer

A) True 
 B)False

Question 8

As we move downward and to the right along a linear, downward-sloping demand curve,

Accepted Answer

A)  both slope and elasticity remain constant. 
B)  slope changes but elasticity remains constant. 
C)  both slope and elasticity change. 
D)  slope remains constant but elasticity changes. 
A)  both slope and elasticity remain constant. 
B)  slope changes but elasticity remains constant. 
C)  both slope and elasticity change. 
D)  slope remains constant but elasticity changes.

Question 9

Demand for a good is said to be inelastic if the quantity demanded increases substantially when the price falls by a small amount.

Accepted Answer

A) True 
 B)False

Question 10

When consumers face rising gasoline prices, they typically

Accepted Answer

A)  reduce their quantity demanded more in the long run than in the short run. 
B)  reduce their quantity demanded more in the short run than in the long run. 
C)  do not reduce their quantity demanded in the short run or the long run. 
D)  increase their quantity demanded in the short run but reduce their quantity demanded in the long run. 
A)  reduce their quantity demanded more in the long run than in the short run. 
B)  reduce their quantity demanded more in the short run than in the long run. 
C)  do not reduce their quantity demanded in the short run or the long run. 
D)  increase their quantity demanded in the short run but reduce their quantity demanded in the long run.

Question 11

Total revenue

Accepted Answer

A)  always increases as price increases. 
B)  increases as price increases, as long as demand is elastic. 
C)  decreases as price increases, as long as demand is inelastic. 
D)  remains unchanged as price increases when demand is unit elastic. 
A)  always increases as price increases. 
B)  increases as price increases, as long as demand is elastic. 
C)  decreases as price increases, as long as demand is inelastic. 
D)  remains unchanged as price increases when demand is unit elastic.

Question 12

Demand is said to be price elastic if

Accepted Answer

A)  the price of the good responds substantially to changes in demand. 
B)  demand shifts substantially when income or the expected future price of the good changes. 
C)  buyers do not respond much to changes in the price of the good. 
D)  buyers respond substantially to changes in the price of the good. 
A)  the price of the good responds substantially to changes in demand. 
B)  demand shifts substantially when income or the expected future price of the good changes. 
C)  buyers do not respond much to changes in the price of the good. 
D)  buyers respond substantially to changes in the price of the good.

Question 13

What is the price elasticity of demand at any point on a perfectly inelastic demand curve?

Accepted Answer

The price

Question 14

If the income elasticity of demand for a good is 0.56, is the good a normal or inferior good?

Accepted Answer

The good i

Question 15

Refer to Table 5-12. Using the midpoint method, what is the price elasticity of demand between $2 and $4?

Accepted Answer

The price

Question 16

A discovery that increases wheat yields per acre hurts farmers by increasing supply and lowering their total revenues.

Accepted Answer

A) True 
 B)False

Question 17

Table 5-10  
-Refer to Table 5-10. Using the midpoint method, which of the three supply curves has the most inelastic price elasticity of supply?

Accepted Answer

A)  Supply curve X 
B)  Supply curve Y 
C)  Supply curve Z 
D)  There is no difference in the elasticities of the three supply curves. 
A)  Supply curve X 
B)  Supply curve Y 
C)  Supply curve Z 
D)  There is no difference in the elasticities of the three supply curves.

Question 18

The flatter the demand curve that passes through a given point, the more elastic the demand.

Accepted Answer

A) True 
 B)False

Question 19

Last year, Jim bought 8 tickets to sporting events when his income was $30,000. This year, his income is $33,000, and he purchased 10 tickets to sporting events. Holding other factors constant and using the midpoint method, it follows that Jim's income elasticity of demand is about

Accepted Answer

A)  0.43, and Jim regards tickets to sporting events as inferior goods. 
B)  0.43, and Jim regards tickets to sporting events as normal goods. 
C)  2.33, and Jim regards tickets to sporting events as inferior goods. 
D)  2.33, and Jim regards tickets to sporting events as normal goods. 
A)  0.43, and Jim regards tickets to sporting events as inferior goods. 
B)  0.43, and Jim regards tickets to sporting events as normal goods. 
C)  2.33, and Jim regards tickets to sporting events as inferior goods. 
D)  2.33, and Jim regards tickets to sporting events as normal goods.

Question 20

Which of the following is not a determinant of the price elasticity of demand for a good?

Accepted Answer

A)  the time horizon 
B)  the steepness or flatness of the supply curve for the good 
C)  the definition of the market for the good 
D)  the availability of substitutes for the good 
A)  the time horizon 
B)  the steepness or flatness of the supply curve for the good 
C)  the definition of the market for the good 
D)  the availability of substitutes for the good

Exam 5: Elasticity and Its Application

The measure of how willing consumers are to buy less of a good as its price rises is called

Measures of elasticity enhance our ability to study the magnitudes of changes in quantities in response to changes in prices or income.

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, at a price of $12, what is the income elasticity of demand when income rises from $5,000 to $10,000?

If we observe that when the price of chocolate decreases by 10%, quantity demanded increases by 25%, then the demand for chocolate is price elastic.

Figure 5-4 -Refer to Figure 5-4. Assume the section of the demand curve from A to B corresponds to prices between $6 and $12. Then, when the price increases from $8 to $10,

When studying how some event or policy affects a market, elasticity provides information on the

Cross-price elasticity of demand measures how the quantity demanded of one good changes as the price of another good changes.

As we move downward and to the right along a linear, downward-sloping demand curve,

Demand for a good is said to be inelastic if the quantity demanded increases substantially when the price falls by a small amount.

When consumers face rising gasoline prices, they typically

Total revenue

Demand is said to be price elastic if

What is the price elasticity of demand at any point on a perfectly inelastic demand curve?

If the income elasticity of demand for a good is 0.56, is the good a normal or inferior good?

Refer to Table 5-12. Using the midpoint method, what is the price elasticity of demand between $2 and $4?

A discovery that increases wheat yields per acre hurts farmers by increasing supply and lowering their total revenues.

Table 5-10 -Refer to Table 5-10. Using the midpoint method, which of the three supply curves has the most inelastic price elasticity of supply?

The flatter the demand curve that passes through a given point, the more elastic the demand.

Last year, Jim bought 8 tickets to sporting events when his income was $30,000. This year, his income is $33,000, and he purchased 10 tickets to sporting events. Holding other factors constant and using the midpoint method, it follows that Jim's income elasticity of demand is about

Which of the following is not a determinant of the price elasticity of demand for a good?

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 Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

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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