Question 1

The price elasticity of demand measures how much

Accepted Answer

A)   quantity demanded responds to a change in price.
B)   quantity demanded responds to a change in income.
C)   price responds to a change in demand.
D)   demand responds to a change in supply.E) All of the above
F) A) and C)

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

An increase in the price of cheese crackers from $2.25 to $2.45 per box causes suppliers of cheese crackers to increase their quantity supplied from 125 boxes per minute to 145 boxes per minute. Using the midpoint method, supply is

Accepted Answer

A)   elastic, and the price elasticity of supply is 1.74.
B)   elastic, and the price elasticity of supply is 0.57.
C)   inelastic, and the price elasticity of supply is 1.74.
D)   inelastic, and the price elasticity of supply is 0.57.E) All of the above
F) B) and C)

Question 4

A "Just Say No" drug education policy that successfully educates consumers to reduce their demand for drugs will lower drug prices and reduce the quantity of drugs demanded.

Accepted Answer

A) True 
 B)False

Question 5

If two goods are complements, their cross-price elasticity will be

Accepted Answer

A)   positive.
B)   negative.
C)   zero.
D)   equal to the difference between the income elasticities of demand for the two goods.E) All of the above
F) A) and D)

Question 6

When demand is inelastic, 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) None of the above
F) A) and C)

Question 7

The price elasticity of supply measures how much

Accepted Answer

A)   the quantity supplied responds to changes in input prices.
B)   the quantity supplied responds to changes in the price of the good.
C)   the price of the good responds to changes in supply.
D)   sellers respond to changes in technology.E) B) and C)
F) A) and D)

Question 8

Suppose that Juan Carlos is filling out a survey that he received in the mail. The survey asks him what he would do if the price of his favorite toothpaste increased. Juan Carlos reports that he would switch to a different brand. The survey asks what he would do if the price of all toothpastes increased. Juan Carlos reports that he must use toothpaste, so he would have to adjust his spending elsewhere. These examples illustrate the importance of

Accepted Answer

A)   changes in total revenue in determining the price elasticity of demand.
B)   a necessity versus a luxury in determining the price elasticity of demand.
C)   the definition of a market in determining the price elasticity of demand.
D)   the time horizon in determining the price elasticity of demand.E) B) and C)
F) A) and D)

Question 9

Suppose the price of a bag of tortilla chips decreases from $3.00 to $2.50 and, as a result, the quantity of tortilla chips demanded increases from 200 bags to 300 bags. Using the midpoint method, the price elasticity of demand for tortilla chips in the given price range is

Accepted Answer

A)   0.33.
B)   0.45.
C)   2.20.
D)   3.00.E) A) and B)
F) A) and C)

Question 10

When the price of chai tea lattés is $5, Maxine buys 20 per month. When the price is $4, she buys 30 per month. Maxine's demand for chai tea lattés is

Accepted Answer

A)   elastic, and her demand curve would be relatively flat.
B)   elastic, and her demand curve would be relatively steep.
C)   inelastic, and her demand curve would be relatively flat.
D)   inelastic, and her demand curve would be relatively steep.E) A) and D)
F) None of the above

Question 11

Table 5-6 
-Refer to Table 5-6. As price rises from $10 to $15, the price elasticity of demand using the midpoint method is approximately

Accepted Answer

A)   0.40.
B)   0.56.
C)   1.80.
D)   2.50.E) B) and C)
F) A) and B)

Question 12

Figure 5-12 
-Refer to Figure 5-12. If the price decreased from $36 to $12, total revenue would

Accepted Answer

A)   increase by $4,800, and demand is elastic between points X and Z.
B)   increase by $7,200, and demand is elastic between points X and Z.
C)   decrease by $4,800, and demand is inelastic between points X and Z.
D)   decrease by $7,200, and demand is inelastic between points X and Z.E) A) and C)
F) B) and C)

Question 13

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

Accepted Answer

The answer of If a supply curve is perfectly horizontal,...

Question 14

For a good that is a necessity,

Accepted Answer

A)   quantity demanded tends to respond substantially to a change in price.
B)   demand tends to be inelastic.
C)   the law of demand does not apply.
D)   All of the above are correct.E) A) and D)
F) C) and D)

Question 15

Figure 5-20 
-Refer to Figure 5-20. Which supply curve is most likely relevant over a very long period of time?

Accepted Answer

A)   S1
B)   S2
C)   S3
D)   All of the above are equally likely to be relevant over a very long period of time.E) B) and D)
F) B) and C)

Question 16

An increase in price causes an increase in total revenue when demand is

Accepted Answer

A)   elastic.
B)   inelastic.
C)   unit elastic.
D)   All of the above are possible.E) A) and B)
F) A) and C)

Question 17

Holding all other forces constant, if increasing the price of a good leads to a decrease 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 decrease in total revenue.E) B) and C)
F) C) and D)

Question 18

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 19

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

Question 20

Demand is inelastic if the price elasticity of demand is

Accepted Answer

A)   less than 1.
B)   equal to 1.
C)   greater than 1.
D)   equal to 0.E) None of the above
F) A) and C)

Exam 5: Elasticity and Its Application

The price elasticity of demand measures how much

Correct Answer
verified

Figure 5-12 -Refer to Figure 5-12. If the price decreased from $36 to $12, total revenue would

Correct Answer
verified

Suppose the price of a bag of tortilla chips decreases from $3.00 to $2.50 and, as a result, the quantity of tortilla chips demanded increases from 200 bags to 300 bags. Using the midpoint method, the price elasticity of demand for tortilla chips in the given price range is

Correct Answer
verified

The price elasticity of supply measures how much

Correct Answer
verified

When the price of chai tea lattés is $5, Maxine buys 20 per month. When the price is $4, she buys 30 per month. Maxine's demand for chai tea lattés is

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

A "Just Say No" drug education policy that successfully educates consumers to reduce their demand for drugs will lower drug prices and reduce the quantity of drugs demanded.

Correct Answer
verified

Correct Answer
verified

Figure 5-20 -Refer to Figure 5-20. Which supply curve is most likely relevant over a very long period of time?

Correct Answer
verified

An increase in price causes an increase in total revenue when demand is

Correct Answer
verified

For a good that is a necessity,

Correct Answer
verified

If two goods are complements, their cross-price elasticity will be

Correct Answer
verified

Table 5-6 -Refer to Table 5-6. As price rises from $10 to $15, the price elasticity of demand using the midpoint method is approximately

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

Demand is inelastic if the price elasticity of demand is

Correct Answer
verified

When demand is inelastic, a decrease in price will cause

Correct Answer
verified

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

Correct Answer
verified

An increase in the price of cheese crackers from $2.25 to $2.45 per box causes suppliers of cheese crackers to increase their quantity supplied from 125 boxes per minute to 145 boxes per minute. Using the midpoint method, supply is

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Exam 5: Elasticity and Its Application

The price elasticity of demand measures how much

Correct AnswerverifiedShow Answer

Figure 5-12 -Refer to Figure 5-12. If the price decreased from $36 to $12, total revenue would

Correct AnswerverifiedShow Answer

Suppose the price of a bag of tortilla chips decreases from $3.00 to $2.50 and, as a result, the quantity of tortilla chips demanded increases from 200 bags to 300 bags. Using the midpoint method, the price elasticity of demand for tortilla chips in the given price range is

Correct AnswerverifiedShow Answer

The price elasticity of supply measures how much

Correct AnswerverifiedShow Answer

When the price of chai tea lattés is $5, Maxine buys 20 per month. When the price is $4, she buys 30 per month. Maxine's demand for chai tea lattés is

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

A "Just Say No" drug education policy that successfully educates consumers to reduce their demand for drugs will lower drug prices and reduce the quantity of drugs demanded.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 5-20 -Refer to Figure 5-20. Which supply curve is most likely relevant over a very long period of time?

Correct AnswerverifiedShow Answer

An increase in price causes an increase in total revenue when demand is

Correct AnswerverifiedShow Answer

For a good that is a necessity,

Correct AnswerverifiedShow Answer

If two goods are complements, their cross-price elasticity will be

Correct AnswerverifiedShow Answer

Table 5-6 -Refer to Table 5-6. As price rises from $10 to $15, the price elasticity of demand using the midpoint method is approximately

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

Demand is inelastic if the price elasticity of demand is

Correct AnswerverifiedShow Answer

When demand is inelastic, a decrease in price will cause

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

An increase in the price of cheese crackers from $2.25 to $2.45 per box causes suppliers of cheese crackers to increase their quantity supplied from 125 boxes per minute to 145 boxes per minute. Using the midpoint method, supply is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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The price ...
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