Question 1

When we move upward and to the left along a linear,downward-sloping demand curve,price elasticity of demand

Accepted Answer

A)   first becomes smaller, then larger.
B)   always becomes larger.
C)   always becomes smaller.
D)   first becomes larger, then smaller.E) C) and D)
F) B) and C)

Question 2

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

Accepted Answer

A)   laptop computers
B)   iPod shuffles
C)   designer jeans
D)   college tuition for a junior or seniorE) C) and D)
F) A) and B)

Question 3

Figure 5-6
 
-Refer to Figure 5-6.Sellers' total revenue would increase if the price

Accepted Answer

A)   increased from $4 to $6.
B)   increased from $16 to $18.
C)   decreased from $8 to $6.
D)   All of the above are correct.E) A) and B)
F) C) and D)

Question 4

Scenario 5-3
Milk has an inelastic demand, and beef has an elastic demand. Suppose that a mysterious increase in bovine infertility decreases both the population of dairy cows and the population of beef cattle by 50 percent.
-Refer to Scenario 5-3.The change in equilibrium price will be

Accepted Answer

A)   greater in the milk market than in the beef market.
B)   greater in the beef market than in the milk market.
C)   the same in the milk and beef markets.
D)   Any of the above could be correct.E) B) and C)
F) A) and B)

Question 5

At a price of $1.00,a local coffee shop is willing to supply 100 cinnamon rolls per day.At a price of $1.20,the coffee shop would be willing to supply 150 cinnamon rolls per day.Using the midpoint method,the price elasticity of supply is about

Accepted Answer

A)   0.45
B)   0.90
C)   1.11
D)   2.20E) A) and C)
F) A) and B)

Question 6

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

Accepted Answer

A)   ice cream
B)   frozen yogurt
C)   vanilla ice cream
D)   Häagen-Dazs® vanilla bean ice creamE) A) and B)
F) A) and C)

Question 7

If the price elasticity of demand is 1.5,regardless of which two points on the demand curve are used to compute the elasticity,then demand is

Accepted Answer

A)   perfectly inelastic, and the demand curve is vertical.
B)   elastic, and the demand curve is a straight, downward-sloping line.
C)   perfectly elastic, and the demand curve is horizontal.
D)   elastic, and the demand curve is something other than a straight, downward-sloping line.E) A) and C)
F) A) and D)

Question 8

When demand is inelastic,a decrease in price increases total revenue.

Accepted Answer

A) True 
 B)False

Question 9

When demand is inelastic,an increase 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) B) and C)
F) None of the above

Question 10

Figure 5-4
 
-Refer to Figure 5-4.Suppose the point labeled B is the "halfway point" on the demand curve and it corresponds to a price of $5.00.Then,between prices of $4.99 and $5.01,the price elasticity of demand is

Accepted Answer

A)   less than 1 but greater than zero.
B)   equal to 1.
C)   greater than 1.
D)   equal to zero.E) B) and C)
F) A) and C)

Question 11

Figure 5-14
 
-Refer to Figure 5-14.Using the midpoint method,what is the price elasticity of supply between points B and C?

Accepted Answer

A)   1.67
B)   1.19
C)   0.84
D)   0.61E) B) and C)
F) A) and D)

Question 12

Table 5-4
 
-Refer to Table 5-4.As price rises from $10 to $12,the price elasticity of demand using the midpoint method is approximately

Accepted Answer

A)   0.08.
B)   0.18.
C)   0.42.
D)   0.58.E) A) and D)
F) None of the above

Question 13

If a 30 percent change in price causes a 15 percent change in quantity supplied,then the price elasticity of supply is about

Accepted Answer

A)   0.5, and supply is elastic.
B)   0.5, and supply is inelastic.
C)   2, and supply is inelastic.
D)   2, and supply is elastic.E) B) and C)
F) B) and D)

Question 14

Price elasticity of supply measures how much the quantity supplied responds to changes in the price.

Accepted Answer

A) True 
 B)False

Question 15

The demand for Godiva pumpkin truffles is likely quite elastic because

Accepted Answer

A)   truffles melt easily.
B)   this particular type of chocolate is viewed as a necessity by many chocolate lovers.
C)   the market is broadly defined.
D)   other types of chocolate are good substitutes for this particular flavor.E) None of the above
F) C) and D)

Question 16

On a certain supply curve,one point is (quantity supplied = 200,price = $2.00) and another point is (quantity supplied = 250,price = $2.50) .Using the midpoint method,the price elasticity of supply is about

Accepted Answer

A)   0.2.
B)   0.5.
C)   1.0.
D)   2.5.E) All of the above
F) B) and D)

Question 17

Necessities such as food and clothing tend to have

Accepted Answer

A)   high price elasticities of demand and high income elasticities of demand.
B)   high price elasticities of demand and low income elasticities of demand.
C)   low price elasticities of demand and high income elasticities of demand.
D)   low price elasticities of demand and low income elasticities of demand.E) A) and B)
F) A) and D)

Question 18

For which of the following goods is the income elasticity of demand likely highest?

Accepted Answer

A)   natural gas
B)   doctor's visits
C)   hamburgers
D)   boatsE) A) and B)
F) A) and C)

Question 19

Scenario 5-2
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 5-2.The change in equilibrium price will be

Accepted Answer

A)   greater in the aged cheddar cheese market than in the bread market.
B)   greater in the bread market than in the aged cheddar cheese market.
C)   the same in the aged cheddar cheese and bread markets.
D)   Any of the above could be correct.E) None of the above
F) A) and B)

Question 20

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.E) A) and D)
F) B) and D)

Exam 5: Elasticity and Its Application

Total revenue

Correct Answer
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Figure 5-4 -Refer to Figure 5-4.Suppose the point labeled B is the "halfway point" on the demand curve and it corresponds to a price of $5.00.Then,between prices of $4.99 and $5.01,the price elasticity of demand is

Correct Answer
verified

On a certain supply curve,one point is (quantity supplied = 200,price = $2.00) and another point is (quantity supplied = 250,price = $2.50) .Using the midpoint method,the price elasticity of supply is about

Correct Answer
verified

Table 5-4 -Refer to Table 5-4.As price rises from $10 to $12,the price elasticity of demand using the midpoint method is approximately

Correct Answer
verified

Figure 5-14 -Refer to Figure 5-14.Using the midpoint method,what is the price elasticity of supply between points B and C?

Correct Answer
verified

When we move upward and to the left along a linear,downward-sloping demand curve,price elasticity of demand

Correct Answer
verified

Necessities such as food and clothing tend to have

Correct Answer
verified

The demand for Godiva pumpkin truffles is likely quite elastic because

Correct Answer
verified

If a 30 percent change in price causes a 15 percent change in quantity supplied,then the price elasticity of supply is about

Correct Answer
verified

When demand is inelastic,a decrease in price increases total revenue.

Correct Answer
verified

For which of the following goods is the income elasticity of demand likely highest?

Correct Answer
verified

At a price of $1.00,a local coffee shop is willing to supply 100 cinnamon rolls per day.At a price of $1.20,the coffee shop would be willing to supply 150 cinnamon rolls per day.Using the midpoint method,the price elasticity of supply is about

Correct Answer
verified

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

Correct Answer
verified

Figure 5-6 -Refer to Figure 5-6.Sellers' total revenue would increase if the price

Correct Answer
verified

Scenario 5-3 Milk has an inelastic demand, and beef has an elastic demand. Suppose that a mysterious increase in bovine infertility decreases both the population of dairy cows and the population of beef cattle by 50 percent. -Refer to Scenario 5-3.The change in equilibrium price will be

Correct Answer
verified

If the price elasticity of demand is 1.5,regardless of which two points on the demand curve are used to compute the elasticity,then demand is

Correct Answer
verified

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

Correct Answer
verified

When demand is inelastic,an increase in price will cause

Correct Answer
verified

Price elasticity of supply measures how much the quantity supplied responds to changes in the price.

Correct Answer
verified

Correct Answer
verified

Exam 5: Elasticity and Its Application

Total revenue

Correct AnswerverifiedShow Answer

Figure 5-4 -Refer to Figure 5-4.Suppose the point labeled B is the "halfway point" on the demand curve and it corresponds to a price of $5.00.Then,between prices of $4.99 and $5.01,the price elasticity of demand is

Correct AnswerverifiedShow Answer

On a certain supply curve,one point is (quantity supplied = 200,price = $2.00) and another point is (quantity supplied = 250,price = $2.50) .Using the midpoint method,the price elasticity of supply is about

Correct AnswerverifiedShow Answer

Table 5-4 -Refer to Table 5-4.As price rises from $10 to $12,the price elasticity of demand using the midpoint method is approximately

Correct AnswerverifiedShow Answer

Figure 5-14 -Refer to Figure 5-14.Using the midpoint method,what is the price elasticity of supply between points B and C?

Correct AnswerverifiedShow Answer

When we move upward and to the left along a linear,downward-sloping demand curve,price elasticity of demand

Correct AnswerverifiedShow Answer

Necessities such as food and clothing tend to have

Correct AnswerverifiedShow Answer

The demand for Godiva pumpkin truffles is likely quite elastic because

Correct AnswerverifiedShow Answer

If a 30 percent change in price causes a 15 percent change in quantity supplied,then the price elasticity of supply is about

Correct AnswerverifiedShow Answer

When demand is inelastic,a decrease in price increases total revenue.

Correct AnswerverifiedShow Answer

For which of the following goods is the income elasticity of demand likely highest?

Correct AnswerverifiedShow Answer

At a price of $1.00,a local coffee shop is willing to supply 100 cinnamon rolls per day.At a price of $1.20,the coffee shop would be willing to supply 150 cinnamon rolls per day.Using the midpoint method,the price elasticity of supply is about

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 5-6 -Refer to Figure 5-6.Sellers' total revenue would increase if the price

Correct AnswerverifiedShow Answer

Scenario 5-3 Milk has an inelastic demand, and beef has an elastic demand. Suppose that a mysterious increase in bovine infertility decreases both the population of dairy cows and the population of beef cattle by 50 percent. -Refer to Scenario 5-3.The change in equilibrium price will be

Correct AnswerverifiedShow Answer

If the price elasticity of demand is 1.5,regardless of which two points on the demand curve are used to compute the elasticity,then demand is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When demand is inelastic,an increase in price will cause

Correct AnswerverifiedShow Answer

Price elasticity of supply measures how much the quantity supplied responds to changes in the price.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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