Question 1

If a 15% change in price results in a 20% change in quantity supplied, then the price elasticity of supply is about

Accepted Answer

A)   1.33, and supply is elastic.
B)   1.33, and supply is inelastic.
C)   0.75, and supply is elastic.
D)   0.75, and supply is inelastic.E) All of the above
F) A) and B)

Question 2

Suppose that when the price rises by 20% for a particular good, the quantity demanded of that good falls by 10%.
The price elasticity of demand for this good is equal to 2.0.

Accepted Answer

A) True 
 B)False

Question 3

Goods with close substitutes tend to have more elastic demands than do goods without close substitutes.

Accepted Answer

A) True 
 B)False

Question 4

Table 5-4
The following table shows the demand schedule for a particular good.
 
-Refer to Table 5-4. Using the midpoint method, when price falls from $8 to $4, the price elasticity of demand is

Accepted Answer

A)   0.43
B)   0.67
C)   1
D)   2.33E) A) and D)
F) A) and C)

Question 5

If the price elasticity of demand for a good is 4, then a 12 percent decrease in price results in a

Accepted Answer

A)   0.33 percent increase in the quantity demanded.
B)   3 percent increase in the quantity demanded.
C)   30 percent increase in the quantity demanded.
D)   48 percent increase in the quantity demanded.E) None of the above
F) A) and B)

Question 6

Figure 5-5 
-Refer to Figure 5-5. Using the midpoint method, demand is unit elastic between prices of

Accepted Answer

A)   $20 and $40.
B)   $40 and$50.
C)   $40 and$60.
D)   $50 and$70.E) A) and D)
F) A) and C)

Question 7

The demand for soap is more elastic than the demand for Dove soap.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following could be the price elasticity of demand for a good for which a decrease in price would decrease revenue?

Accepted Answer

A)   0.8
B)   1
C)   1.8
D)   2.4E) A) and C)
F) All of the above

Question 9

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

Accepted Answer

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

Question 10

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)   the mayor
B)   the city manager
C)   The answer depends on the price elasticity of demand.
D)   The answer depends on the costs of construction of the new municipal swimming pool.E) A) and D)
F) None of the above

Question 11

Good news for farming can be bad news for farmers because the

Accepted Answer

A)   supply curve for an individual farmer is usually perfectly elastic.
B)   supply curve for an individual farmer is usually perfectly inelastic.
C)   demand for basic foodstuffs is usually inelastic, meaning that factors that shift supply to the right decrease total revenues to sellers.
D)   demand for basic foodstuffs is usually elastic, meaning that factors that shift supply to the right increase total revenues to sellers.E) C) and D)
F) A) and B)

Question 12

Figure 5-16 
-Refer to Figure 5-16. Using the midpoint method, what is the price elasticity of supply between $4 and $6?

Accepted Answer

A)   0.75
B)   1.00
C)   1.20
D)   1.25E) A) and B)
F) None of the above

Question 13

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

Question 14

The difference between slope and elasticity is that slope

Accepted Answer

A)   is a ratio of two changes, and elasticity is a ratio of two percentage changes.
B)   is a ratio of two percentage changes, and elasticity is a ratio of two changes.
C)   measures changes in quantity demanded more accurately than elasticity.
D)   None of the above is correct; there is no difference between slope and elasticity.E) C) and D)
F) A) and B)

Question 15

When demand is elastic, 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 16

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, the cross price elasticity of demand is

Accepted Answer

A)   about 0.22, and the two goods are substitutes.
B)   about -0.005, and the two goods are complements.
C)   1, and the two goods are substitutes.
D)   1, and the two goods are unitary elastic.E) B) and C)
F) B) and D)

Question 17

Last year, Max bought 6 pairs of athletic shoes when his income was $35,000. This year, his income is $42,000, and he purchased 8 pairs of athletic shoes. Holding other factors constant, it follows that Max

Accepted Answer

A)   considers athletic shoes to be necessities.
B)   considers athletic shoes to be inferior goods.
C)   considers athletic shoes to be normal goods.
D)   has a low price elasticity of demand for athletic shoes.E) B) and C)
F) None of the above

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) All of the above
F) None of the above

Question 19

Suppose that demand is inelastic within a certain price range. For that price range,

Accepted Answer

A)   an increase in price would increase total revenue because the decrease in quantity demanded is proportionately less than the increase in price.
B)   an increase in price would decrease total revenue because the decrease in quantity demanded is proportionately greater than the increase in price.
C)   a decrease in price would increase total revenue because the increase in quantity demanded is proportionately smaller than the decrease in price.
D)   a decrease in price would not affect total revenue.E) A) and B)
F) None of the above

Question 20

Figure 5-10 
-Refer to Figure 5-10. Total revenue when the price is P2 is represented by the areas)

Accepted Answer

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

Exam 5: Elasticity and Its Application

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

Correct Answer
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Figure 5-10 -Refer to Figure 5-10. Total revenue when the price is P2 is represented by the areas)

Correct Answer
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Table 5-4 The following table shows the demand schedule for a particular good. -Refer to Table 5-4. Using the midpoint method, when price falls from $8 to $4, the price elasticity of demand is

Correct Answer
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Which of the following could be the price elasticity of demand for a good for which a decrease in price would decrease revenue?

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

Correct Answer
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When demand is elastic, an increase in price will cause

Correct Answer
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For a good that is a luxury, demand

Correct Answer
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If a 15% change in price results in a 20% change in quantity supplied, then the price elasticity of supply is about

Correct Answer
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Figure 5-16 -Refer to Figure 5-16. Using the midpoint method, what is the price elasticity of supply between $4 and $6?

Correct Answer
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The difference between slope and elasticity is that slope

Correct Answer
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Correct Answer
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Suppose that demand is inelastic within a certain price range. For that price range,

Correct Answer
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Good news for farming can be bad news for farmers because the

Correct Answer
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Suppose that when the price rises by 20% for a particular good, the quantity demanded of that good falls by 10%. The price elasticity of demand for this good is equal to 2.0.

Correct Answer
verified

The demand for soap is more elastic than the demand for Dove soap.

Correct Answer
verified

If the price elasticity of demand for a good is 4, then a 12 percent decrease in price results in a

Correct Answer
verified

Figure 5-5 -Refer to Figure 5-5. Using the midpoint method, demand is unit elastic between prices of

Correct Answer
verified

Goods with close substitutes tend to have more elastic demands than do goods without close substitutes.

Correct Answer
verified

Last year, Max bought 6 pairs of athletic shoes when his income was $35,000. This year, his income is $42,000, and he purchased 8 pairs of athletic shoes. Holding other factors constant, it follows that Max

Correct Answer
verified

Exam 5: Elasticity and Its Application

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

Correct AnswerverifiedShow Answer

Figure 5-10 -Refer to Figure 5-10. Total revenue when the price is P2 is represented by the areas)

Correct AnswerverifiedShow Answer

Table 5-4 The following table shows the demand schedule for a particular good. -Refer to Table 5-4. Using the midpoint method, when price falls from $8 to $4, the price elasticity of demand is

Correct AnswerverifiedShow Answer

Which of the following could be the price elasticity of demand for a good for which a decrease in price would decrease revenue?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When demand is elastic, an increase in price will cause

Correct AnswerverifiedShow Answer

For a good that is a luxury, demand

Correct AnswerverifiedShow Answer

If a 15% change in price results in a 20% change in quantity supplied, then the price elasticity of supply is about

Correct AnswerverifiedShow Answer

Figure 5-16 -Refer to Figure 5-16. Using the midpoint method, what is the price elasticity of supply between $4 and $6?

Correct AnswerverifiedShow Answer

The difference between slope and elasticity is that slope

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose that demand is inelastic within a certain price range. For that price range,

Correct AnswerverifiedShow Answer

Good news for farming can be bad news for farmers because the

Correct AnswerverifiedShow Answer

Suppose that when the price rises by 20% for a particular good, the quantity demanded of that good falls by 10%. The price elasticity of demand for this good is equal to 2.0.

Correct AnswerverifiedShow Answer

The demand for soap is more elastic than the demand for Dove soap.

Correct AnswerverifiedShow Answer

If the price elasticity of demand for a good is 4, then a 12 percent decrease in price results in a

Correct AnswerverifiedShow Answer

Figure 5-5 -Refer to Figure 5-5. Using the midpoint method, demand is unit elastic between prices of

Correct AnswerverifiedShow Answer

Goods with close substitutes tend to have more elastic demands than do goods without close substitutes.

Correct AnswerverifiedShow Answer

Last year, Max bought 6 pairs of athletic shoes when his income was $35,000. This year, his income is $42,000, and he purchased 8 pairs of athletic shoes. Holding other factors constant, it follows that Max

Correct AnswerverifiedShow Answer

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