Question 1

If demand is price inelastic, then when price rises, total revenue

Accepted Answer

A)  will fall.
B)  will rise.
C)  will remain unchanged.
D)  may rise, fall, or remain unchanged. More information is need to determine the change in total revenue with certainty.E) A) and C)
F) B) and C)

Question 2

The supply of a good will be more elastic, the

Accepted Answer

A)  more the good is considered a luxury.
B)  broader is the definition of the market for the good.
C)  larger the number of close substitutes for the good.
D)  longer the time period being considered.E) B) and C)
F) C) and D)

Question 3

Table 5-5 
-Refer to Table 5-5. As price rises from $7 to $8, the price elasticity of demand using the midpoint method is approximately

Accepted Answer

A)  0.09.
B)  0.58.
C)  0.65.
D)  1.53.E) All of the above
F) A) and C)

Question 4

As we move downward and to the right along a linear, downward-sloping demand curve,

Accepted Answer

A)  both slope and elasticity remain constant.
B)  slope changes but elasticity remains constant.
C)  both slope and elasticity change.
D)  slope remains constant but elasticity changes.E) A) and D)
F) B) and C)

Question 5

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. Your roommate still enjoys Ramen noodles very much and buys even more, but you plan to buy fewer Ramen noodles in favor of foods you prefer 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) A) and D)
F) C) and D)

Question 6

Figure 5-12 
-Refer to Figure 5-12. Using the midpoint method, the price elasticity of demand between point Y and point Z is

Accepted Answer

A)  0.5.
B)  0.75.
C)  1.0.
D)  1.3.E) B) and C)
F) A) and B)

Question 7

The demand for bread is likely to be more elastic than the demand for solid-gold bread plates.

Accepted Answer

A) True 
 B)False

Question 8

Table 5-4
The following table shows the demand schedule for a particular good. 
-Refer to Table 5-4. Using the midpoint method, what is the price elasticity of demand when price rises from $12 to $16?

Accepted Answer

A)  0.43
B)  0.67
C)  2.33
D)  4E) All of the above
F) C) and D)

Question 9

Figure 5-3 
-Refer to Figure 5-3. Which demand curve is perfectly elastic?

Accepted Answer

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

Question 10

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

Accepted Answer

A)  chocolate
B)  Godiva chocolate
C)  Hershey's chocolate
D)  All three would have the same elasticity of demand because they are all related.E) A) and D)
F) A) and C)

Question 11

Which of the following statements about agriculture in the U.S. is correct?

Accepted Answer

A)  From the 1950s to today, agricultural output has approximately doubled.
B)  Because technological improvements increase the supply of a product for which demand is inelastic, an individual farmer would be better off not adopting the new technology.
C)  Increasing the supply of agricultural products typically benefits consumers but harms farmers.
D)  Technological improvements typically increase both supply and revenue for individual farmers.E) None of the above
F) A) and B)

Question 12

Figure 5-5 
-Refer to Figure 5-5. Using the midpoint method, between prices of $50 and $60, price elasticity of demand is about

Accepted Answer

A)  0.22.
B)  0.82.
C)  1.22.
D)  2.E) A) and C)
F) B) and C)

Question 13

Figure 5-21 
-Refer to Figure 5-21. Using the midpoint method, what is the price elasticity of supply between $15 and $25?

Accepted Answer

The price ...

Question 14

If the price of milk rises, when is the price elasticity of demand likely to be the lowest?

Accepted Answer

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

Question 15

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 C)
F) A) and D)

Question 16

When demand is inelastic, a decrease in price increases total revenue.

Accepted Answer

A) True 
 B)False

Question 17

Figure 5-4 
-Refer to Figure 5-4. Assume the section of the demand curve from B to C corresponds to prices between $0 and $15. Then, when the price changes between $7 and $9,

Accepted Answer

A)  quantity demanded changes proportionately less than the price.
B)  quantity demanded changes proportionately more than the price.
C)  quantity demanded changes the same amount proportionately as price.
D)  the price elasticity of demand equals zero.E) All of the above
F) C) and D)

Question 18

Figure 5-13 
-Refer to Figure 5-13. Between point A and point B on the graph, demand is

Accepted Answer

A)  perfectly elastic.
B)  inelastic.
C)  unit elastic.
D)  elastic, but not perfectly elastic.E) A) and B)
F) A) and C)

Question 19

If the income elasticity of demand for a good is -1.40, is the good a normal or inferior good?

Accepted Answer

The good i...

Question 20

Consider the following pairs of goods. For which of the two goods would you expect the demand to be more price elastic? Why?
a.water or diamonds
b.insulin or nasal decongestant spray
c.food in general or breakfast cereal
d.gasoline over the course of a week or gasoline over the course of a year
e.
personal computers or IBM personal computers

Accepted Answer

a.Diamonds are luxuries, and water is a ...

Exam 5: Elasticity and Its Application

The supply of a good will be more elastic, the

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, what is the price elasticity of demand when price rises from $12 to $16?

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

Correct Answer
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Figure 5-3 -Refer to Figure 5-3. Which demand curve is perfectly elastic?

Correct Answer
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If demand is price inelastic, then when price rises, total revenue

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

Correct Answer
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If the income elasticity of demand for a good is -1.40, is the good a normal or inferior good?

Correct Answer
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The good i...
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When demand is inelastic, a decrease in price increases total revenue.

Correct Answer
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Figure 5-13 -Refer to Figure 5-13. Between point A and point B on the graph, demand is

Correct Answer
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Which of the following statements about agriculture in the U.S. is correct?

Correct Answer
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As we move downward and to the right along a linear, downward-sloping demand curve,

Correct Answer
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Figure 5-12 -Refer to Figure 5-12. Using the midpoint method, the price elasticity of demand between point Y and point Z is

Correct Answer
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Figure 5-4 -Refer to Figure 5-4. Assume the section of the demand curve from B to C corresponds to prices between $0 and $15. Then, when the price changes between $7 and $9,

Correct Answer
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Figure 5-5 -Refer to Figure 5-5. Using the midpoint method, between prices of $50 and $60, price elasticity of demand is about

Correct Answer
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If the price of milk rises, when is the price elasticity of demand likely to be the lowest?

Correct Answer
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a.Diamonds are luxuries, and water is a ...
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Figure 5-21 -Refer to Figure 5-21. Using the midpoint method, what is the price elasticity of supply between $15 and $25?

Correct Answer
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The price ...
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Table 5-5 -Refer to Table 5-5. As price rises from $7 to $8, the price elasticity of demand using the midpoint method is approximately

Correct Answer
verified

The demand for bread is likely to be more elastic than the demand for solid-gold bread plates.

Correct Answer
verified

Exam 5: Elasticity and Its Application

The supply of a good will be more elastic, the

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, what is the price elasticity of demand when price rises from $12 to $16?

Correct AnswerverifiedShow Answer

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

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Figure 5-3 -Refer to Figure 5-3. Which demand curve is perfectly elastic?

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If demand is price inelastic, then when price rises, total revenue

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

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If the income elasticity of demand for a good is -1.40, is the good a normal or inferior good?

Correct AnswerverifiedThe good i...View AnswerShow Answer

When demand is inelastic, a decrease in price increases total revenue.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 5-13 -Refer to Figure 5-13. Between point A and point B on the graph, demand is

Correct AnswerverifiedShow Answer

Which of the following statements about agriculture in the U.S. is correct?

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As we move downward and to the right along a linear, downward-sloping demand curve,

Correct AnswerverifiedShow Answer

Figure 5-12 -Refer to Figure 5-12. Using the midpoint method, the price elasticity of demand between point Y and point Z is

Correct AnswerverifiedShow Answer

Figure 5-4 -Refer to Figure 5-4. Assume the section of the demand curve from B to C corresponds to prices between $0 and $15. Then, when the price changes between $7 and $9,

Correct AnswerverifiedShow Answer

Figure 5-5 -Refer to Figure 5-5. Using the midpoint method, between prices of $50 and $60, price elasticity of demand is about

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If the price of milk rises, when is the price elasticity of demand likely to be the lowest?

Correct AnswerverifiedShow Answer

Correct Answerverifieda.Diamonds are luxuries, and water is a ...View AnswerShow Answer

Figure 5-21 -Refer to Figure 5-21. Using the midpoint method, what is the price elasticity of supply between $15 and $25?

Correct AnswerverifiedThe price ...View AnswerShow Answer

Table 5-5 -Refer to Table 5-5. As price rises from $7 to $8, the price elasticity of demand using the midpoint method is approximately

Correct AnswerverifiedShow Answer

The demand for bread is likely to be more elastic than the demand for solid-gold bread plates.

Correct AnswerverifiedShow Answer

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The good i...
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a.Diamonds are luxuries, and water is a ...
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The price ...
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