Question 1

Figure 5-4 
-Refer to Figure 5-4. If the price increases in the region of the demand curve between points B and C, we can expect total revenue to

Accepted Answer

A)   increase.
B)   stay the same.
C)   decrease.
D)   first decrease, then increase until total revenue is maximized.E) A) and D)
F) All of the above

Question 2

Knowing that the demand for wheat is inelastic, if all farmers voluntarily did not plant wheat on 10 percent of their land, then

Accepted Answer

A)   consumers of wheat would buy more wheat.
B)   wheat farmers would suffer a reduction in their total revenue.
C)   wheat farmers would experience an increase in their total revenue.
D)   the demand for wheat would decrease.E) C) and D)
F) None of the above

Question 3

A government program that pays farmers not to plant corn on part of their land can help farmers not only through the subsidy payments to farmers who participate in the program but also by raising the market price of corn.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

For a particular good, an 8 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 necessity.
C)   The market for the good is broadly defined.
D)   The relevant time horizon is long.E) None of the above
F) A) and C)

Question 6

If the price elasticity of supply is 0.4, and a price increase led to a 5% increase in quantity supplied, then the price increase is about

Accepted Answer

A)   0.25%.
B)   1.2%.
C)   2%.
D)   12.5%.E) A) and B)
F) A) and C)

Question 7

Table 5-13
Consider the following demand schedule.
 
-Refer to Table 5-13. Using the midpoint method, what is the price elasticity of demand between $12 and $15?

Accepted Answer

The answer of Table 5-13
Consider the following demand schedule.
 
-Refer...

Question 8

You and your college roommate eat three packages of Ramen noodles each week. After graduation last month, both of you were hired at several times your college income. You still enjoy Ramen noodles very much and buy even more, but your roommate plans to buy fewer Ramen noodles in favor of foods she prefers more. When looking at income elasticity of demand for Ramen noodles, yours would

Accepted Answer

A)   be negative, and your roommate's would be positive.
B)   be positive, and your roommate's would be negative.
C)   be zero, and your roommate's would approach infinity.
D)   approach infinity, and your roommate's would be zero.E) C) and D)
F) B) and D)

Question 9

If demand is price inelastic, then

Accepted Answer

A)   buyers do not respond much to a change in price.
B)   buyers respond substantially to a change in price, but the response is very slow.
C)   buyers do not alter their quantities demanded much in response to advertising, fads, or general changes in tastes.
D)   the demand curve is very flat.E) B) and D)
F) A) and D)

Question 10

If the quantity supplied is the same regardless of price, then supply is

Accepted Answer

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

Question 11

If the price of gasoline rises, when is the price elasticity of demand likely to be the highest?

Accepted Answer

A)   immediately after the price increases
B)   one month after the price increase
C)   three months after the price increase
D)   one year after the price increaseE) C) and D)
F) All of the above

Question 12

Which of the following should be held constant when calculating an income elasticity of demand?

Accepted Answer

A)   the price of the good
B)   prices of related goods
C)   tastes
D)   All of the above should be held constant.E) A) and D)
F) A) and C)

Question 13

Which of the following statements is not correct concerning government attempts to reduce the flow of illegal drugs into the country? Drug interdiction

Accepted Answer

A)   raises prices and total revenue in the drug market.
B)   can increase drug-related crime.
C)   shifts the demand curve for drugs to the left.
D)   shifts the supply curve of drugs to the left.E) B) and C)
F) A) and B)

Question 14

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) A) and B)
F) A) and C)

Question 15

The flatter the demand curve through a given point, the

Accepted Answer

A)   greater the price elasticity of demand at that point.
B)   smaller the price elasticity of demand at that point.
C)   closer the price elasticity of demand will be to the slope of the curve.
D)   greater the absolute value of the change in total revenue when there is a movement from that point upward and to the left along the demand curve.E) All of the above
F) B) and C)

Question 16

Figure 5-6 
-Refer to Figure 5-6. For prices below $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 B)
F) A) and C)

Question 17

Demand is said to have unit elasticity if the price elasticity of demand is

Accepted Answer

A)   less than 1.
B)   greater than 1.
C)   equal to 1.
D)   equal to 0.E) A) and C)
F) A) and D)

Question 18

Table 5-2
 
-Refer to Table 5-2. Using the midpoint method, if the price falls from $100 to $50, the absolute value of the price elasticity of demand is

Accepted Answer

A)   0.31.
B)   0.46.
C)   1.25.
D)   2.17E) A) and D)
F) B) and D)

Question 19

At a price of $1.20, a local coffee shop is willing to supply 100 cinnamon rolls per day. At a price of $1.40, 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)   0.15
B)   2.5
C)   0.375
D)   2.60E) A) and D)
F) B) and C)

Question 20

Along the elastic portion of a linear demand curve, total revenue rises as price rises.

Accepted Answer

A) True 
 B)False

Exam 5: Elasticity and Its Application

Which of the following should be held constant when calculating an income elasticity of demand?

Correct Answer
verified

At a price of $1.20, a local coffee shop is willing to supply 100 cinnamon rolls per day. At a price of $1.40, 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

Knowing that the demand for wheat is inelastic, if all farmers voluntarily did not plant wheat on 10 percent of their land, then

Correct Answer
verified

Figure 5-4 -Refer to Figure 5-4. If the price increases in the region of the demand curve between points B and C, we can expect total revenue to

Correct Answer
verified

Table 5-2 -Refer to Table 5-2. Using the midpoint method, if the price falls from $100 to $50, the absolute value of the price elasticity of demand is

Correct Answer
verified

If the quantity supplied is the same regardless of price, then supply is

Correct Answer
verified

For a particular good, an 8 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

A government program that pays farmers not to plant corn on part of their land can help farmers not only through the subsidy payments to farmers who participate in the program but also by raising the market price of corn.

Correct Answer
verified

When demand is inelastic, an increase in price will cause

Correct Answer
verified

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

Correct Answer
verified

The flatter the demand curve through a given point, the

Correct Answer
verified

Table 5-13 Consider the following demand schedule. -Refer to Table 5-13. Using the midpoint method, what is the price elasticity of demand between $12 and $15?

Correct Answer
verified

Demand is said to have unit elasticity if the price elasticity of demand is

Correct Answer
verified

If the price elasticity of supply is 0.4, and a price increase led to a 5% increase in quantity supplied, then the price increase is about

Correct Answer
verified

Along the elastic portion of a linear demand curve, total revenue rises as price rises.

Correct Answer
verified

Which of the following statements is not correct concerning government attempts to reduce the flow of illegal drugs into the country? Drug interdiction

Correct Answer
verified

If the price of gasoline rises, when is the price elasticity of demand likely to be the highest?

Correct Answer
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Correct Answer
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If demand is price inelastic, then

Correct Answer
verified

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

Correct Answer
verified

Exam 5: Elasticity and Its Application

Which of the following should be held constant when calculating an income elasticity of demand?

Correct AnswerverifiedShow Answer

At a price of $1.20, a local coffee shop is willing to supply 100 cinnamon rolls per day. At a price of $1.40, 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

Knowing that the demand for wheat is inelastic, if all farmers voluntarily did not plant wheat on 10 percent of their land, then

Correct AnswerverifiedShow Answer

Figure 5-4 -Refer to Figure 5-4. If the price increases in the region of the demand curve between points B and C, we can expect total revenue to

Correct AnswerverifiedShow Answer

Table 5-2 -Refer to Table 5-2. Using the midpoint method, if the price falls from $100 to $50, the absolute value of the price elasticity of demand is

Correct AnswerverifiedShow Answer

If the quantity supplied is the same regardless of price, then supply is

Correct AnswerverifiedShow Answer

For a particular good, an 8 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

A government program that pays farmers not to plant corn on part of their land can help farmers not only through the subsidy payments to farmers who participate in the program but also by raising the market price of corn.

Correct AnswerverifiedShow Answer

When demand is inelastic, an increase in price will cause

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The flatter the demand curve through a given point, the

Correct AnswerverifiedShow Answer

Table 5-13 Consider the following demand schedule. -Refer to Table 5-13. Using the midpoint method, what is the price elasticity of demand between $12 and $15?

Correct AnswerverifiedShow Answer

Demand is said to have unit elasticity if the price elasticity of demand is

Correct AnswerverifiedShow Answer

If the price elasticity of supply is 0.4, and a price increase led to a 5% increase in quantity supplied, then the price increase is about

Correct AnswerverifiedShow Answer

Along the elastic portion of a linear demand curve, total revenue rises as price rises.

Correct AnswerverifiedShow Answer

Which of the following statements is not correct concerning government attempts to reduce the flow of illegal drugs into the country? Drug interdiction

Correct AnswerverifiedShow Answer

If the price of gasoline rises, when is the price elasticity of demand likely to be the highest?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If demand is price inelastic, then

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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