Question 1

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 2

Charles purchases 20 basketball tickets per year when his annual income is $50,000 and 25 basketball tickets when his annual income is $60,000. Charles's income elasticity of demand for basketball ticket is

Accepted Answer

A)  0.82, and basketball tickets are a normal good.
B)  0.82, and basketball tickets are an inferior good.
C)  1.22, and basketball tickets are a normal good.
D)  1.22, and basketball tickets are an inferior good.E) A) and D)
F) All of the above

Question 3

A candle manufacturer produces 4,000 units when the market price is $11 per unit and produces 6,000 units when the market price is $13 per unit. Using the midpoint method, for this range of prices, the price elasticity of supply is about

Accepted Answer

A)  6.
B)  2.4.
C)  0.4.
D)  0.67.E) A) and C)
F) B) and C)

Question 4

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 5

Using the midpoint method, the price elasticity of demand for a good is computed to be approximately 0.75. Which of the following events is consistent with a 10 percent decrease in the quantity of the good demanded?

Accepted Answer

A)  a 7.5 increase in the price of the good
B)  a 13.33 percent increase in the price of the good
C)  an increase in the price of the good from $7.50 to $10
D)  an increase in the price of the good from $10 to $17.50E) A) and C)
F) B) and D)

Question 6

When the price of knee braces increased by 25 percent, the Brace Yourself Company increased its quantity supplied of knee braces per week by 75 percent. BYC's price elasticity of supply of knee braces is 0.33.

Accepted Answer

A) True 
 B)False

Question 7

Suppose a market has the demand function Qd=20-0.5P. Using the midpoint method, what is the price elasticity of demand between $30 and $40?

Accepted Answer

Question 8

Scenario 5-1
Suppose that when the average college student's income is $10,000 per year, the annual quantity demanded of Patty's Pizza is 50 and the annual quantity demanded of Sue's Subs is 80. Suppose that when the price of Patty's Pizza increases from $8 to $10 per pie, the quantity demanded of Sue's Subs increases from 80 to 100. Suppose also that when the average student's income increases to $12,000 per year, the annual quantity demanded of Patty's Pizza increases from 50 to 60.
-Refer to Scenario 5-1. Using the midpoint method, what is the income elasticity of demand for pizza and what does the value indicate about the demand for pizza?

Accepted Answer

A)  The income elasticity is 0.18 so pizza is a normal good.
B)  The income elasticity is -1 so pizza is an inferior good.
C)  The income elasticity is 1 so pizza is unitary elastic.
D)  The income elasticity is 1 so pizza is a normal good.E) A) and B)
F) A) and C)

Question 9

Suppose that 50 hot dogs are demanded at a particular price. If the price of hot dogs rises from that price by 5 percent, the number of hot dogs demanded falls to 48. Using the midpoint approach to calculate the price elasticity of demand, it follows that the

Accepted Answer

A)  demand for hot dogs in this price range is unit elastic.
B)  price increase will decrease the total revenue of hot dog sellers.
C)  price elasticity of demand for hot dogs in this price range is about 1.22.
D)  price elasticity of demand for hot dogs in this price range is about 0.82.E) B) and D)
F) None of the above

Question 10

If the price elasticity of demand for a good is 6, then a 3 percent decrease in price results in

Accepted Answer

A)  a 20 percent increase in the quantity demanded.
B)  an 18 percent increase in the quantity demanded.
C)  a 2 percent increase in the quantity demanded.
D)  a 1.8 percent increase in the quantity demanded.E) None of the above
F) A) and C)

Question 11

Table 5-12 
-Refer to Table 5-12. Between which two quantities listed is demand unit elastic?

Accepted Answer

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

Question 12

When demand is elastic, a decrease in price will cause

Accepted Answer

A)  an increase in total revenue.
B)  a decrease in total revenue.
C)  no change in total revenue but an increase in quantity demanded.
D)  no change in total revenue but a decrease in quantity demanded.E) A) and D)
F) A) and C)

Question 13

As price elasticity of supply increases, the supply curve

Accepted Answer

A)  becomes flatter.
B)  becomes steeper.
C)  becomes downward sloping.
D)  shifts to the right.E) All of the above
F) None of the above

Question 14

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.E) None of the above
F) All of the above

Question 15

A city wants to raise revenues to build a new municipal swimming pool next year. The mayor suggests that the city raise the price of admission to the current municipal pools this year to raise revenues. The city manager suggests that the city lower the price of admission to raise revenues. Who is correct?

Accepted Answer

A)  Both the mayor and city manager would be correct if demand were price elastic.
B)  Both the mayor and city manager would be correct if demand were price inelastic.
C)  The mayor would be correct if demand were price elastic; the city manager would be correct if demand were price inelastic.
D)  The mayor would be correct if demand were price inelastic; the city manager would be correct if demand were price elastic.E) A) and B)
F) A) and C)

Question 16

For a good that is a luxury, demand

Accepted Answer

A)  tends to be inelastic.
B)  tends to be elastic.
C)  has unit elasticity.
D)  cannot be represented by a demand curve in the usual way.E) B) and C)
F) B) and D)

Question 17

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)  perfectly elastic section of the demand curve.
C)  unit elastic section of the demand curve.
D)  inelastic section of the demand curve.E) A) and C)
F) A) and D)

Question 18

When the price of candy bars is $1.00, the quantity demanded is 500 per day. When the price falls to $0.80, the quantity demanded increases to 600. Given this information and using the midpoint method, we know that the demand for candy bars is

Accepted Answer

A)  inelastic.
B)  elastic.
C)  unit elastic.
D)  perfectly inelastic.E) A) and B)
F) B) and C)

Question 19

Holding all other forces constant, if increasing the price of a good leads to an increase in total revenue, then the demand for the good must be

Accepted Answer

A)  unit elastic.
B)  inelastic.
C)  elastic.
D)  None of the above is correct because a price increase always leads to an increase in total revenue.E) A) and B)
F) A) and C)

Question 20

Figure 5-6 
-Refer to Figure 5-6. For prices above $8, demand is price

Accepted Answer

A)  elastic, and total revenue will rise as price rises.
B)  inelastic, and total revenue will rise as price rises.
C)  elastic, and total revenue will fall as price rises.
D)  inelastic, and total revenue will fall as price rises.E) A) and D)
F) B) and C)

Exam 5: Elasticity and Its Application

Suppose that 50 hot dogs are demanded at a particular price. If the price of hot dogs rises from that price by 5 percent, the number of hot dogs demanded falls to 48. Using the midpoint approach to calculate the price elasticity of demand, it follows that the

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified
The price ...
View Answer

Table 5-12 -Refer to Table 5-12. Between which two quantities listed is demand unit elastic?

Correct Answer
verified

For a good that is a luxury, demand

Correct Answer
verified

When demand is elastic, a decrease in price will cause

Correct Answer
verified

As price elasticity of supply increases, the supply curve

Correct Answer
verified

A candle manufacturer produces 4,000 units when the market price is $11 per unit and produces 6,000 units when the market price is $13 per unit. Using the midpoint method, for this range of prices, the price elasticity of supply is about

Correct Answer
verified

When the price of candy bars is $1.00, the quantity demanded is 500 per day. When the price falls to $0.80, the quantity demanded increases to 600. Given this information and using the midpoint method, we know that the demand for candy bars is

Correct Answer
verified

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

Correct Answer
verified

When the price of knee braces increased by 25 percent, the Brace Yourself Company increased its quantity supplied of knee braces per week by 75 percent. BYC's price elasticity of supply of knee braces is 0.33.

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Using the midpoint method, the price elasticity of demand for a good is computed to be approximately 0.75. Which of the following events is consistent with a 10 percent decrease in the quantity of the good demanded?

Correct Answer
verified

Figure 5-6 -Refer to Figure 5-6. For prices above $8, demand is price

Correct Answer
verified

Holding all other forces constant, if increasing the price of a good leads to an increase in total revenue, then the demand for the good must be

Correct Answer
verified

If the price elasticity of demand for a good is 6, then a 3 percent decrease in price results in

Correct Answer
verified

Charles purchases 20 basketball tickets per year when his annual income is $50,000 and 25 basketball tickets when his annual income is $60,000. Charles's income elasticity of demand for basketball ticket is

Correct Answer
verified

Suppose a market has the demand function Q^d=20-0.5P. Using the midpoint method, what is the price elasticity of demand between $30 and $40?

Correct Answer
verified

Exam 5: Elasticity and Its Application

Suppose that 50 hot dogs are demanded at a particular price. If the price of hot dogs rises from that price by 5 percent, the number of hot dogs demanded falls to 48. Using the midpoint approach to calculate the price elasticity of demand, it follows that the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedThe price ...View AnswerShow Answer

Table 5-12 -Refer to Table 5-12. Between which two quantities listed is demand unit elastic?

Correct AnswerverifiedShow Answer

For a good that is a luxury, demand

Correct AnswerverifiedShow Answer

When demand is elastic, a decrease in price will cause

Correct AnswerverifiedShow Answer

As price elasticity of supply increases, the supply curve

Correct AnswerverifiedShow Answer

A candle manufacturer produces 4,000 units when the market price is $11 per unit and produces 6,000 units when the market price is $13 per unit. Using the midpoint method, for this range of prices, the price elasticity of supply is about

Correct AnswerverifiedShow Answer

When the price of candy bars is $1.00, the quantity demanded is 500 per day. When the price falls to $0.80, the quantity demanded increases to 600. Given this information and using the midpoint method, we know that the demand for candy bars is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When the price of knee braces increased by 25 percent, the Brace Yourself Company increased its quantity supplied of knee braces per week by 75 percent. BYC's price elasticity of supply of knee braces is 0.33.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Using the midpoint method, the price elasticity of demand for a good is computed to be approximately 0.75. Which of the following events is consistent with a 10 percent decrease in the quantity of the good demanded?

Correct AnswerverifiedShow Answer

Figure 5-6 -Refer to Figure 5-6. For prices above $8, demand is price

Correct AnswerverifiedShow Answer

Holding all other forces constant, if increasing the price of a good leads to an increase in total revenue, then the demand for the good must be

Correct AnswerverifiedShow Answer

If the price elasticity of demand for a good is 6, then a 3 percent decrease in price results in

Correct AnswerverifiedShow Answer

Charles purchases 20 basketball tickets per year when his annual income is $50,000 and 25 basketball tickets when his annual income is $60,000. Charles's income elasticity of demand for basketball ticket is

Correct AnswerverifiedShow Answer

Suppose a market has the demand function Qd=20-0.5P. Using the midpoint method, what is the price elasticity of demand between $30 and $40?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The price ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Suppose a market has the demand function Q^d=20-0.5P. Using the midpoint method, what is the price elasticity of demand between $30 and $40?

Correct Answer
verified