Question 1

Figure 5-10 
-Refer to Figure 5-10.When price falls from $50 to $40,demand is

Accepted Answer

A)   inelastic,since total revenue decreases from $8,000 to $5,000.
B)   inelastic,since total revenue increases from $5,000 to $8,000.
C)   elastic,since total revenue increases from $5,000 to $8,000.
D)   unit elastic,since total revenue does not change.E) A) and B)
F) B) and C)

Question 2

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 D)
F) None of the above

Question 3

Suppose demand is given by the equation:  Using the midpoint method,what is the price elasticity of demand between $7 and $8?

Accepted Answer

The price ...

Question 4

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

Accepted Answer

A)   athletic shoes
B)   running shoes
C)   Nike running shoes
D)   Nike Shox running shoesE) None of the above
F) B) and C)

Question 5

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) All of the above
F) B) and C)

Question 6

Figure 5-7 
-Refer to Figure 5-7.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) B) and D)
F) None of the above

Question 7

If demand is perfectly elastic,the demand curve is horizontal,and the price elasticity of demand equals 1.

Accepted Answer

A) True 
 B)False

Question 8

There are fewer farmers in the United States today than 200 years ago because of

Accepted Answer

A)   improvements in farm technology.
B)   increased government regulations in farming.
C)   an elastic demand for food.
D)   environmental programs designed to reduce soil erosion.E) B) and C)
F) A) and B)

Question 9

Figure 5-1 
-Refer to Figure 5-1.Between point A and point B,the slope is equal to

Accepted Answer

A)   -1/4,and the price elasticity of demand is equal to 2/3.
B)   -1/4,and the price elasticity of demand is equal to 3/2.
C)   -3/2,and the price elasticity of demand is equal to 1/4.
D)   -2/3,and the price elasticity of demand is equal to 3/2.E) A) and B)
F) B) and C)

Question 10

Figure 5-10 
-Refer to Figure 5-10.An increase in price from $30 to $35 would

Accepted Answer

A)   increase total revenue by $250
B)   decrease total revenue by $250.
C)   increase total revenue by $500.
D)   decrease total revenue by $500.E) B) and C)
F) C) and D)

Question 11

Which of the following statements about the consumers' responses to rising gasoline prices is correct?

Accepted Answer

A)   About 10 percent of the long-run reduction in quantity demanded arises because people drive less and about 90 percent arises because they switch to more fuel-efficient cars.
B)   About 90 percent of the long-run reduction in quantity demanded arises because people drive less and about 10 percent arises because they switch to more fuel-efficient cars.
C)   About half of the long-run reduction in quantity demanded arises because people drive less and about half arises because they switch to more fuel-efficient cars.
D)   Because gasoline is a necessity,consumers do not decrease their quantity demanded in either the short run or the long run.E) B) and D)
F) A) and C)

Question 12

A person who takes a prescription drug to control high cholesterol most likely has a demand for that drug that is

Accepted Answer

A)   inelastic.
B)   unit elastic.
C)   elastic.
D)   highly responsive to changes in income.E) All of the above
F) A) and C)

Question 13

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

Accepted Answer

A)   the quantity of the good demanded
B)   the price of the good
C)   income
D)   All of the above should be held constant.E) A) and B)
F) C) and D)

Question 14

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

Question 15

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) None of the above
F) All of the above

Question 16

How does the concept of elasticity allow us to improve upon our understanding of supply and demand?

Accepted Answer

A)   Elasticity allows us to analyze supply and demand with greater precision than would be the case in the absence of the elasticity concept.
B)   Elasticity provides us with a better rationale for statements such as "an increase in x will lead to a decrease in y" than we would have in the absence of the elasticity concept.
C)   Without elasticity,we would not be able to address the direction in which price is likely to move in response to a surplus or a shortage.
D)   Without elasticity,it is very difficult to assess the degree of competition within a market.E) A) and B)
F) B) and C)

Question 17

A manufacturer produces 400 units when the market price of $10 per unit and produces 600 units when the market price is $12 per unit.Using the midpoint method,for this range of prices,the price elasticity of supply is about

Accepted Answer

A)   0.45.
B)   2.0.
C)   2.2.
D)   200.E) B) and D)
F) B) and C)

Question 18

Suppose the price of natural gas,a typical fuel for heating homes,rises in January in Alaska.Would you expect the price elasticity of demand for natural gas to more inelastic immediately after the price increase or at some point in the future?

Accepted Answer

The price elasticity...

Question 19

Kevin tunes pianos.If the demand for piano-tuning services is elastic,Kevin could increase his total revenue by

Accepted Answer

A)   increasing the price of his piano-tuning services.
B)   decreasing the price of his piano-tuning services.
C)   leaving the price of his piano-tuning services unchanged.
D)   None of the above is correct.E) A) and B)
F) B) and C)

Question 20

If a 15% increase in price for a good results in a 20% decrease in quantity demanded,the price elasticity of demand is

Accepted Answer

A)   0.75.
B)   1.25.
C)   1.33.
D)   1.60.E) A) and B)
F) C) and D)

Exam 5: Elasticity and Its Application

Figure 5-10 -Refer to Figure 5-10.An increase in price from $30 to $35 would

Correct Answer
verified

There are fewer farmers in the United States today than 200 years ago because of

Correct Answer
verified

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

Correct Answer
verified

Figure 5-7 -Refer to Figure 5-7.For prices below $8,demand is price

Correct Answer
verified

Correct Answer
verified

If demand is perfectly elastic,the demand curve is horizontal,and the price elasticity of demand equals 1.

Correct Answer
verified

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

Correct Answer
verified

Figure 5-10 -Refer to Figure 5-10.When price falls from $50 to $40,demand is

Correct Answer
verified

Which of the following statements about the consumers' responses to rising gasoline prices is correct?

Correct Answer
verified

A person who takes a prescription drug to control high cholesterol most likely has a demand for that drug that is

Correct Answer
verified

Figure 5-1 -Refer to Figure 5-1.Between point A and point B,the slope is equal to

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

A manufacturer produces 400 units when the market price of $10 per unit and produces 600 units when the market price is $12 per unit.Using the midpoint method,for this range of prices,the price elasticity of supply is about

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Kevin tunes pianos.If the demand for piano-tuning services is elastic,Kevin could increase his total revenue by

Correct Answer
verified

Suppose demand is given by the equation: Using the midpoint method,what is the price elasticity of demand between $7 and $8?

Correct Answer
verified
The price ...
View Answer

How does the concept of elasticity allow us to improve upon our understanding of supply and demand?

Correct Answer
verified

If a 15% increase in price for a good results in a 20% decrease in quantity demanded,the price elasticity of demand is

Correct Answer
verified

Suppose the price of natural gas,a typical fuel for heating homes,rises in January in Alaska.Would you expect the price elasticity of demand for natural gas to more inelastic immediately after the price increase or at some point in the future?

Correct Answer
verified
The price elasticity...
View Answer

Exam 5: Elasticity and Its Application

Figure 5-10 -Refer to Figure 5-10.An increase in price from $30 to $35 would

Correct AnswerverifiedShow Answer

There are fewer farmers in the United States today than 200 years ago because of

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 5-7 -Refer to Figure 5-7.For prices below $8,demand is price

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If demand is perfectly elastic,the demand curve is horizontal,and the price elasticity of demand equals 1.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 5-10 -Refer to Figure 5-10.When price falls from $50 to $40,demand is

Correct AnswerverifiedShow Answer

Which of the following statements about the consumers' responses to rising gasoline prices is correct?

Correct AnswerverifiedShow Answer

A person who takes a prescription drug to control high cholesterol most likely has a demand for that drug that is

Correct AnswerverifiedShow Answer

Figure 5-1 -Refer to Figure 5-1.Between point A and point B,the slope is equal to

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

A manufacturer produces 400 units when the market price of $10 per unit and produces 600 units when the market price is $12 per unit.Using the midpoint method,for this range of prices,the price elasticity of supply is about

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Kevin tunes pianos.If the demand for piano-tuning services is elastic,Kevin could increase his total revenue by

Correct AnswerverifiedShow Answer

Suppose demand is given by the equation: Using the midpoint method,what is the price elasticity of demand between $7 and $8?

Correct AnswerverifiedThe price ...View AnswerShow Answer

How does the concept of elasticity allow us to improve upon our understanding of supply and demand?

Correct AnswerverifiedShow Answer

If a 15% increase in price for a good results in a 20% decrease in quantity demanded,the price elasticity of demand is

Correct AnswerverifiedShow Answer

Suppose the price of natural gas,a typical fuel for heating homes,rises in January in Alaska.Would you expect the price elasticity of demand for natural gas to more inelastic immediately after the price increase or at some point in the future?

Correct AnswerverifiedThe price elasticity...View AnswerShow Answer

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The price ...
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The price elasticity...
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