Question 1

If the price elasticity of demand is equal to 1,then demand is unit elastic.

Accepted Answer

A) True 
 B)False

Question 2

You are in charge of the local city-owned golf course.You need to increase the revenue generated by the golf course in order to meet expenses.The mayor advises you to decrease the price of a round of golf.The city manager recommends increasing the price of a round of golf.You realize that

Accepted Answer

A)   the mayor thinks demand is elastic,and the city manager thinks demand is inelastic.
B)   both the mayor and the city manager think that demand is elastic.
C)   both the mayor and the city manager think that demand is inelastic.
D)   the mayor thinks demand is inelastic,and the city manager thinks demand is elastic.E) None of the above
F) C) and D)

Question 3

The discovery of a new hybrid wheat would increase the supply of wheat.As a result,wheat farmers would realize an increase in total revenue if

Accepted Answer

A)   the supply of wheat is elastic.
B)   the supply of wheat is inelastic.
C)   the demand for wheat is inelastic.
D)   the demand for wheat is elastic.E) C) and D)
F) B) and C)

Question 4

The demand for Werthers candy is likely

Accepted Answer

A)   elastic because candy is expensive relative to other snacks.
B)   elastic because there are many close substitutes for Werthers.
C)   elastic because Werthers are regarded as a necessity by many people.
D)   inelastic because it is usually eaten quickly,making the relevant time horizon short.E) A) and C)
F) A) and B)

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

The price elasticity of demand measures

Accepted Answer

A)   buyers' responsiveness to a change in the price of a good.
B)   the extent to which demand increases as additional buyers enter the market.
C)   how much more of a good consumers will demand when incomes rise.
D)   the movement along a supply curve when there is a change in demand.E) A) and C)
F) B) and C)

Question 7

Figure 5-2 
-Refer to Figure 5-2.As price falls from Pa to Pb,which demand curve represents the most elastic demand?

Accepted Answer

A)   D1
B)   D2
C)   D3
D)   All of the above are equally elastic.E) C) and D)
F) B) and C)

Question 8

How did the farm population in the United States change between 1950 and 2008?

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.E) All of the above
F) A) and C)

Question 9

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 equilibrium price will

Accepted Answer

A)   increase in the aged cheddar cheese market and increase in the bread market.
B)   increase in the aged cheddar cheese market and decrease in the bread market.
C)   decrease in the aged cheddar cheese market and increase in the bread market.
D)   decrease in the aged cheddar cheese market and decrease in the bread market.E) All of the above
F) None of the above

Question 10

If a 25% change in price results in a 40% change in quantity supplied,then the price elasticity of supply is

Accepted Answer

A)   0.63,and supply is elastic.
B)   0.63,and supply is inelastic.
C)   1.60,and supply is elastic.
D)   1.60,and supply is inelastic.E) B) and C)
F) All of the above

Question 11

For a particular good,a 2 percent increase in price causes a 12 percent decrease in quantity demanded.Which of the following statements is most likely applicable to this good?

Accepted Answer

A)   There are no close substitutes for this good.
B)   The good is a luxury.
C)   The market for the good is broadly defined.
D)   The relevant time horizon is short.E) None of the above
F) B) and D)

Question 12

If the price of calculators increases by 15 percent and the quantity demanded per week falls by 45 percent as a result,then the price elasticity of demand is 3.

Accepted Answer

A) True 
 B)False

Question 13

Table 5-2
The following table shows a portion of the demand schedule for a particular good at various levels of income.
 
-Refer to Table 5-2.Using the midpoint method,when income equals $7,500,what is the price elasticity of demand between $16 and $20?

Accepted Answer

A)   0.56
B)   0.75
C)   1.33
D)   1.80E) A) and B)
F) None of the above

Question 14

Suppose the price of Twinkies decreases from $1.45 to $1.25 and,as a result,the quantity of Twinkies demanded increases from 2,000 to 2,200.Using the midpoint method,the price elasticity of demand for Twinkies in the given price range is

Accepted Answer

A)   2.00.
B)   1.55.
C)   1.00.
D)   0.64.E) A) and B)
F) A) and C)

Question 15

Figure 5-5 
-Refer to Figure 5-5.Using the midpoint method,between prices of $12 and $18,price elasticity of demand is

Accepted Answer

A)   0.33.
B)   0.67.
C)   1.33.
D)   1.89.E) B) and C)
F) B) and D)

Question 16

Some firms eventually experience problems with their capacity to produce output as their output levels increase.For these firms,

Accepted Answer

A)   market power is substantial.
B)   supply is perfectly inelastic.
C)   supply is more elastic at low levels of output and less elastic at high levels of output.
D)   supply is less elastic at low levels of output and more elastic at high levels of output.E) A) and D)
F) None of the above

Question 17

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.E) A) and C)
F) None of the above

Question 18

Table 5-1
 
-Suppose that quantity demand rises by 10% as a result of a 15% decrease in price.The price elasticity of demand for this good is

Accepted Answer

A)   inelastic and equal to 0.67.
B)   elastic and equal to 0.67.
C)   inelastic and equal to 1.50.
D)   elastic and equal to 1.50.E) A) and B)
F) B) and C)

Question 19

If the cross-price elasticity of two goods is positive,then those two goods are

Accepted Answer

A)   substitutes.
B)   complements.
C)   normal goods.
D)   inferior goods.E) B) and D)
F) A) and B)

Question 20

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

Exam 5: Elasticity and Its Application

How did the farm population in the United States change between 1950 and 2008?

Correct Answer
verified

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

Correct Answer
verified

If the price elasticity of demand is equal to 1,then demand is unit elastic.

Correct Answer
verified

Figure 5-5 -Refer to Figure 5-5.Using the midpoint method,between prices of $12 and $18,price elasticity of demand is

Correct Answer
verified

For a particular good,a 2 percent increase in price causes a 12 percent decrease in quantity demanded.Which of the following statements is most likely applicable to this good?

Correct Answer
verified

If the cross-price elasticity of two goods is positive,then those two goods are

Correct Answer
verified

Correct Answer
verified

You are in charge of the local city-owned golf course.You need to increase the revenue generated by the golf course in order to meet expenses.The mayor advises you to decrease the price of a round of golf.The city manager recommends increasing the price of a round of golf.You realize that

Correct Answer
verified

The discovery of a new hybrid wheat would increase the supply of wheat.As a result,wheat farmers would realize an increase in total revenue if

Correct Answer
verified

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

Correct Answer
verified

The demand for Werthers candy is likely

Correct Answer
verified

Correct Answer
verified

Figure 5-2 -Refer to Figure 5-2.As price falls from Pa to Pb,which demand curve represents the most elastic demand?

Correct Answer
verified

Some firms eventually experience problems with their capacity to produce output as their output levels increase.For these firms,

Correct Answer
verified

If the price of calculators increases by 15 percent and the quantity demanded per week falls by 45 percent as a result,then the price elasticity of demand is 3.

Correct Answer
verified

Table 5-2 The following table shows a portion of the demand schedule for a particular good at various levels of income. -Refer to Table 5-2.Using the midpoint method,when income equals $7,500,what is the price elasticity of demand between $16 and $20?

Correct Answer
verified

If a 25% change in price results in a 40% change in quantity supplied,then the price elasticity of supply is

Correct Answer
verified

Table 5-1 -Suppose that quantity demand rises by 10% as a result of a 15% decrease in price.The price elasticity of demand for this good is

Correct Answer
verified

The price elasticity of demand measures

Correct Answer
verified

Suppose the price of Twinkies decreases from $1.45 to $1.25 and,as a result,the quantity of Twinkies demanded increases from 2,000 to 2,200.Using the midpoint method,the price elasticity of demand for Twinkies in the given price range is

Correct Answer
verified

Exam 5: Elasticity and Its Application

How did the farm population in the United States change between 1950 and 2008?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the price elasticity of demand is equal to 1,then demand is unit elastic.

Correct AnswerverifiedShow Answer

Figure 5-5 -Refer to Figure 5-5.Using the midpoint method,between prices of $12 and $18,price elasticity of demand is

Correct AnswerverifiedShow Answer

For a particular good,a 2 percent increase in price causes a 12 percent decrease in quantity demanded.Which of the following statements is most likely applicable to this good?

Correct AnswerverifiedShow Answer

If the cross-price elasticity of two goods is positive,then those two goods are

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

You are in charge of the local city-owned golf course.You need to increase the revenue generated by the golf course in order to meet expenses.The mayor advises you to decrease the price of a round of golf.The city manager recommends increasing the price of a round of golf.You realize that

Correct AnswerverifiedShow Answer

The discovery of a new hybrid wheat would increase the supply of wheat.As a result,wheat farmers would realize an increase in total revenue if

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The demand for Werthers candy is likely

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 5-2 -Refer to Figure 5-2.As price falls from Pa to Pb,which demand curve represents the most elastic demand?

Correct AnswerverifiedShow Answer

Some firms eventually experience problems with their capacity to produce output as their output levels increase.For these firms,

Correct AnswerverifiedShow Answer

If the price of calculators increases by 15 percent and the quantity demanded per week falls by 45 percent as a result,then the price elasticity of demand is 3.

Correct AnswerverifiedShow Answer

Table 5-2 The following table shows a portion of the demand schedule for a particular good at various levels of income. -Refer to Table 5-2.Using the midpoint method,when income equals $7,500,what is the price elasticity of demand between $16 and $20?

Correct AnswerverifiedShow Answer

If a 25% change in price results in a 40% change in quantity supplied,then the price elasticity of supply is

Correct AnswerverifiedShow Answer

Table 5-1 -Suppose that quantity demand rises by 10% as a result of a 15% decrease in price.The price elasticity of demand for this good is

Correct AnswerverifiedShow Answer

The price elasticity of demand measures

Correct AnswerverifiedShow Answer

Suppose the price of Twinkies decreases from $1.45 to $1.25 and,as a result,the quantity of Twinkies demanded increases from 2,000 to 2,200.Using the midpoint method,the price elasticity of demand for Twinkies in the given price range is

Correct AnswerverifiedShow Answer

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