Question 1

What is a key determinant of the elasticity of supply

Accepted Answer

A) the ability of sellers to change the price of the good they produce 
B) the number of firms in the market 
C) how responsive buyers are to changes in sellers' prices 
D) the ability of sellers to change the amount of the good they produce

Question 2

Suppose a producer is able to separate customers into two groups,one having a price inelastic demand and the other having a price elastic demand.If the producer's objective is to increase total revenue,what should she do

Accepted Answer

A) Increase the price charged to customers with the price elastic demand and decrease the price charged to customers with the price inelastic demand. 
B) Decrease the price charged to customers with the price elastic demand and increase the price charged to customers with the price inelastic demand. 
C) Decrease the price to both groups of customers. 
D) Increase the price for both groups of customers.

Question 3

Because the demand for wheat tends to be inelastic,what would the development of a new,more productive hybrid wheat tend to do

Accepted Answer

A) increase the total revenue of wheat farmers 
B) decrease the total revenue of wheat farmers 
C) weaken the demand for wheat 
D) weaken the supply of wheat

Question 4

Table 5-1
 
-Refer to Table 5-1.Notice that lowering the price from $12 to $8 per ticket decreases revenue by $8000.In the $8 to $12 price range,what must the demand for baseball tickets be

Accepted Answer

A) price inelastic 
B) price elastic 
C) price unit elastic 
D) income elastic

Question 5

Get Smart University is contemplating increasing tuition to increase revenue.What must the school believe

Accepted Answer

A) The supply of university education is inelastic. 
B) The demand for university education is elastic. 
C) The demand for university education is inelastic. 
D) The supply of university education is elastic.

Question 6

The price elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in price.

Accepted Answer

A) True 
 B)False

Question 7

When the price elasticity of demand is perfectly inelastic,what can be said about the elasticity and the demand curve

Accepted Answer

A) The elasticity is 0 and the demand curve is vertical. 
B) The elasticity is 0 and the demand curve is horizontal. 
C) The elasticity approaches infinity and the demand curve is vertical. 
D) The elasticity approaches infinity and the demand curve is horizontal.

Question 8

Which of the following situations will occur,given a vertical supply curve

Accepted Answer

A) Suppliers will not respond to a change in price. 
B) An infinite quantity will be supplied at a given price. 
C) Suppliers will refuse to sell the product at the current market price. 
D) If the price of the product increases, quantity supplied will increase substantially.

Question 9

Suppose that you are in charge of pricing at a local sandwich shop.The business needs to increase revenue and your job is on the line.What should you do

Accepted Answer

A) If the demand for sandwiches is elastic, increase the price of sandwiches. 
B) If the demand for sandwiches is elastic, decrease the price of sandwiches 
C) If the demand for sandwiches is inelastic, do not change the price of sandwiches 
D) If the demand for sandwiches is inelastic, decrease the price of sandwiches.

Question 10

Why is the midpoint method used to compute elasticity

Accepted Answer

A) It automatically computes a positive number instead of a negative number. 
B) It uses the same equation that is used to compute slope. 
C) It gives the same answer regardless of the direction of change. 
D) It automatically rounds quantities to the nearest whole unit.

Question 11

Table 5-2 
-Refer to Table 5-2.Which of the following best describes good Y

Accepted Answer

A) not related to income 
B) an inferior good 
C) price inelastic 
D) a normal good

Question 12

What does the price elasticity of supply measure

Accepted Answer

A) how much the quantity supplied responds to changes in input prices 
B) how much the quantity supplied responds to changes in the price of the good 
C) how much the price of the good responds to changes in supply 
D) how much sellers respond to changes in technology

Question 13

When the price of bubble gum is $0.55,the quantity demanded is 400 packs per day.When the price falls to $0.45,the quantity demanded increases to 600.Given this information,and using the midpoint method,what do you know about the demand for bubble gum

Accepted Answer

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

Question 14

Suppose that the cross-price elasticity of demand between hot dogs and mustard is -1.5.If there is a 20 percent increase in the price of hot dogs,what will happen to the quantity of mustard purchased

Accepted Answer

A) It will fall by 200 percent. 
B) It will fall by 30 percent. 
C) It will rise by 200 percent. 
D) It will rise by 30 percent.

Question 15

Last year,Jenna bought 50 kilograms of hamburger when her household's income was $60,000.This year,the household income was only $50,000 and Jenna bought 60 kilograms of hamburger.All else constant,what is Jenna's income elasticity of demand for hamburger,and what does this imply

Accepted Answer

A) positive, so Jenna considers hamburger to be an inferior good 
B) positive, so Jenna considers hamburger to be a normal good and a necessity 
C) negative, so Jenna considers hamburger to be an inferior good 
D) negative, so Jenna considers hamburger to be a normal good

Question 16

When the price to stream movies is $4,Denise rents five per month.When the price is $3,she rents nine per month.What is Denise's demand for movie streaming,and how steep would her demand curve be

Accepted Answer

A) Her demand is elastic and the curve would be relatively flat. 
B) Her demand is elastic and the curve would be relatively steep. 
C) Her demand is inelastic and the curve would be relatively flat. 
D) Her demand is inelastic and the curve would be relatively steep.

Question 17

The elasticity of demand will change along which kind of demand curve

Accepted Answer

A) a horizontal demand curve 
B) a linear, upward-sloping demand curve 
C) a linear, downward-sloping demand curve 
D) elasticity of demand remains constant along all demand curves

Question 18

Which good would you expect to have the highest income elasticity of demand

Accepted Answer

A) water 
B) diamonds 
C) hamburgers 
D) housing

Question 19

The income elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in income.

Accepted Answer