Question 1

There are fewer farmers in the United States today than 200 years ago because of

Accepted Answer

A)  improvements in farm technology. 
B)  increased government regulations in farming. 
C)  an elastic demand for food. 
D)  environmental programs designed to reduce soil erosion. 
A)  improvements in farm technology. 
B)  increased government regulations in farming. 
C)  an elastic demand for food. 
D)  environmental programs designed to reduce soil erosion.

Question 2

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 3

Figure 5-4  
-Refer to Figure 5-4. Assume the section of the demand curve from A to B corresponds to prices between $8 and $16. Then, when the price changes between $9 and $10,

Accepted Answer

A)  quantity demanded changes proportionately less than the price. 
B)  quantity demanded changes proportionately more than the price. 
C)  quantity demanded changes the same amount proportionately as price. 
D)  the price elasticity of demand equals 1. 
A)  quantity demanded changes proportionately less than the price. 
B)  quantity demanded changes proportionately more than the price. 
C)  quantity demanded changes the same amount proportionately as price. 
D)  the price elasticity of demand equals 1.

Question 4

Good news for farming can be bad news for farmers because the

Accepted Answer

A)  supply curve for an individual farmer is usually perfectly elastic. 
B)  supply curve for an individual farmer is usually perfectly inelastic. 
C)  demand for basic foodstuffs is usually inelastic, meaning that factors that shift supply to the right decrease total revenues to sellers. 
D)  demand for basic foodstuffs is usually elastic, meaning that factors that shift supply to the right increase total revenues to sellers. 
A)  supply curve for an individual farmer is usually perfectly elastic. 
B)  supply curve for an individual farmer is usually perfectly inelastic. 
C)  demand for basic foodstuffs is usually inelastic, meaning that factors that shift supply to the right decrease total revenues to sellers. 
D)  demand for basic foodstuffs is usually elastic, meaning that factors that shift supply to the right increase total revenues to sellers.

Question 5

Figure 5-20  
-Refer to Figure 5-20. Which supply curve represents perfectly inelastic supply?

Accepted Answer

A)  S1 
B)  S2 
C)  S3 
D)  None of the supply curves is perfectly inelastic. 
A)  S1 
B)  S2 
C)  S3 
D)  None of the supply curves is perfectly inelastic.

Question 6

The cross-price elasticity of demand can tell us whether goods are

Accepted Answer

A)  normal or inferior. 
B)  elastic or inelastic. 
C)  luxuries or necessities. 
D)  complements or substitutes. 
A)  normal or inferior. 
B)  elastic or inelastic. 
C)  luxuries or necessities. 
D)  complements or substitutes.

Question 7

Figure 5-10  
-Refer to Figure 5-10. Total revenue when the price is P2 is represented by the area(s)

Accepted Answer

A)  B + D. 
B)  A + B. 
C)  C + D. 
D)  D. 
A)  B + D. 
B)  A + B. 
C)  C + D. 
D)  D.

Question 8

To determine whether a good is considered normal or inferior, one could examine the value of the

Accepted Answer

A)  income elasticity of demand for that good. 
B)  price elasticity of demand for that good. 
C)  price elasticity of supply for that good. 
D)  cross-price elasticity of demand for that good. 
A)  income elasticity of demand for that good. 
B)  price elasticity of demand for that good. 
C)  price elasticity of supply for that good. 
D)  cross-price elasticity of demand for that good.

Question 9

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

Accepted Answer

A)  dental floss 
B)  milk 
C)  salt 
D)  diamond earrings 
A)  dental floss 
B)  milk 
C)  salt 
D)  diamond earrings

Question 10

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

Accepted Answer

A)  5.3. 
B)  2.8. 
C)  0.8. 
D)  0.36. 
A)  5.3. 
B)  2.8. 
C)  0.8. 
D)  0.36.

Question 11

If a 10% decrease in price for a good results in a 20% increase in quantity demanded, the price elasticity of demand is

Accepted Answer

A)  0.50. 
B)  1. 
C)  1.5. 
D)  2. 
A)  0.50. 
B)  1. 
C)  1.5. 
D)  2.

Question 12

Which of the following could be the price elasticity of demand for a good for which an increase in price would increase revenue?

Accepted Answer

A)  0.3 
B)  1 
C)  1.8 
D)  None of the above could be correct. 
A)  0.3 
B)  1 
C)  1.8 
D)  None of the above could be correct.

Question 13

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

Accepted Answer

A)  lattés 
B)  doctor's visits 
C)  eggs 
D)  natural gas 
A)  lattés 
B)  doctor's visits 
C)  eggs 
D)  natural gas

Question 14

The demand for bread is likely to be more elastic than the demand for solid-gold bread plates.

Accepted Answer

A) True 
 B)False

Question 15

Table 5-5  
-Refer to Table 5-5. As price rises from $5 to $6, the price elasticity of demand using the midpoint method is approximately

Accepted Answer

A)  0.07. 
B)  0.18. 
C)  0.41. 
D)  2.45. 
A)  0.07. 
B)  0.18. 
C)  0.41. 
D)  2.45.

Question 16

If the income elasticity of demand for a good is negative, then the good must be an inferior good.

Accepted Answer

A) True 
 B)False

Question 17

How did the farm population in the United States change between 1950 and today?

Accepted Answer

A)  It dropped from 10 million to fewer than 3 million people. 
B)  It dropped from 20 million to fewer than 5 million people. 
C)  It dropped from 30 million to just over 6 million people. 
D)  It increased from 10 million to almost 13 million people. 
A)  It dropped from 10 million to fewer than 3 million people. 
B)  It dropped from 20 million to fewer than 5 million people. 
C)  It dropped from 30 million to just over 6 million people. 
D)  It increased from 10 million to almost 13 million people.

Question 18

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

Accepted Answer

The price

Question 19

Figure 5-4  
-Refer to Figure 5-4. The section of the demand curve from B to C represents the

Accepted Answer

A)  elastic section of the demand curve. 
B)  inelastic section of the demand curve. 
C)  unit elastic section of the demand curve. 
D)  perfectly elastic section of the demand curve. 
A)  elastic section of the demand curve. 
B)  inelastic section of the demand curve. 
C)  unit elastic section of the demand curve. 
D)  perfectly elastic section of the demand curve.

Question 20

The demand for grape-flavored Hubba Bubba bubble gum is likely

Accepted Answer

A)  inelastic because there are many close substitutes for grape-flavored Hubba Bubba . 
B)  elastic because there are many close substitutes for grape-flavored Hubba Bubba. 
C)  inelastic because the market is broadly defined. 
D)  elastic because the market is broadly defined. 
A)  inelastic because there are many close substitutes for grape-flavored Hubba Bubba . 
B)  elastic because there are many close substitutes for grape-flavored Hubba Bubba. 
C)  inelastic because the market is broadly defined. 
D)  elastic because the market is broadly defined.

Exam 5: Elasticity and Its Application

There are fewer farmers in the United States today than 200 years ago because of

Figure 5-4 -Refer to Figure 5-4. Assume the section of the demand curve from A to B corresponds to prices between $8 and $16. Then, when the price changes between $9 and $10,

Good news for farming can be bad news for farmers because the

Figure 5-20 -Refer to Figure 5-20. Which supply curve represents perfectly inelastic supply?

The cross-price elasticity of demand can tell us whether goods are

Figure 5-10 -Refer to Figure 5-10. Total revenue when the price is P2 is represented by the area(s)

To determine whether a good is considered normal or inferior, one could examine the value of the

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

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

If a 10% decrease in price for a good results in a 20% increase in quantity demanded, the price elasticity of demand is

Which of the following could be the price elasticity of demand for a good for which an increase in price would increase revenue?

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

The demand for bread is likely to be more elastic than the demand for solid-gold bread plates.

Table 5-5 -Refer to Table 5-5. As price rises from $5 to $6, the price elasticity of demand using the midpoint method is approximately

If the income elasticity of demand for a good is negative, then the good must be an inferior good.

How did the farm population in the United States change between 1950 and today?

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

Figure 5-4 -Refer to Figure 5-4. The section of the demand curve from B to C represents the

The demand for grape-flavored Hubba Bubba bubble gum is likely

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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