Question 1

Elasticity is

Accepted Answer

A)  a measure of how much buyers and sellers respond to changes in market conditions.
B)  the study of how the allocation of resources affects economic well-being.
C)  the maximum amount that a buyer will pay for a good.
D)  the value of everything a seller must give up to produce a good.E) A) and C)
F) B) and C)

Question 2

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

Accepted Answer

A)  white chocolate chip with macadamia nut cookies
B)  hardback novels
C)  salt
D)  box seats at a major league baseball gameE) A) and D)
F) B) and C)

Question 3

If the quantity demanded of a certain good responds only slightly to a change in the price of the good, then the

Accepted Answer

A)  demand for the good is said to be elastic.
B)  demand for the good is said to be inelastic.
C)  law of demand does not apply to the good.
D)  demand curve for the good shifts only slightly in response to a change in price.E) A) and D)
F) All of the above

Question 4

Using the midpoint method, the price elasticity of demand for a good is computed to be approximately 2. Which of the following events is consistent with a 0.1 percent increase in the price of the good?

Accepted Answer

A)  The quantity of the good demanded decreases from 250 to 150.
B)  The quantity of the good demanded decreases from 200 to 100.
C)  The quantity of the good demanded decreases by 0.05 percent.
D)  The quantity of the good demanded decreases by 0.2 percent.E) All of the above
F) B) and C)

Question 5

A government program that reduces land under cultivation can help farmers by raising prices but hurts consumers.

Accepted Answer

A) True 
 B)False

Question 6

Figure 5-10 2 is represented by the area(s)  A) B + D. B) A + B. C) C + D. D) D." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 5-10. Total revenue when the price is P2 is represented by the area(s)

Accepted Answer

A)  B + D.
B)  A + B.
C)  C + D.
D)  D.E) B) and C)
F) None of the above

Question 7

Suppose a market has the demand function Qd=20-0.5P. Between which of the following price ranges is demand most inelastic?

Accepted Answer

A)  $0 to $10
B)  $10 to $20
C)  $20 to $30
D)  $30 to $40E) None of the above
F) A) and B)

Question 8

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 9

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

Accepted Answer

A)  fountain ink pens
B)  milk
C)  disposable diapers
D)  shampooE) A) and B)
F) B) and C)

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) C) and D)

Question 11

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

Accepted Answer

A)  tennis lessons
B)  allergy medication
C)  clothing
D)  cell phone contractsE) None of the above
F) A) and D)

Question 12

Demand is said to be inelastic if the

Accepted Answer

A)  quantity demanded changes proportionately more than price.
B)  price changes proportionately more than income.
C)  quantity demanded changes proportionately less than price.
D)  quantity demanded changes proportionately the same as price.E) None of the above
F) B) and C)

Question 13

Figure 5-10 1 and P2. B) a decrease in price from P2 to P1 will cause an increase in total revenue. C) the magnitude of the percent change in price between P1 and P2 is smaller than the magnitude of the corresponding percent change in quantity demanded. D) All of the above are correct." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 5-10. If rectangle D is larger than rectangle A, then

Accepted Answer

A)  demand is elastic between prices P1 and P2.
B)  a decrease in price from P2 to P1 will cause an increase in total revenue.
C)  the magnitude of the percent change in price between P1 and P2 is smaller than the magnitude of the corresponding percent change in quantity demanded.
D)  All of the above are correct.E) B) and C)
F) C) and D)

Question 14

Tyler purchases 5 pounds of hot dogs per month when his monthly income is $2,000 and 4 pounds of hot dogs per month when his monthly income is $2,200. Tyler's income elasticity of demand for hot dogs is

Accepted Answer

A)  2.33, and hot dogs are a normal good.
B)  -2.33, and hot dogs are an inferior good.
C)  0.43, and hot dogs are a normal good.
D)  -0.43, and hot dogs are an inferior good.E) A) and C)
F) A) and D)

Question 15

When supply is perfectly elastic, the value of the price elasticity of supply is

Accepted Answer

A)  0.
B)  1.
C)  greater than 0 and less than 1.
D)  infinity.E) B) and C)
F) All of the above

Question 16

Get Smart University is contemplating an increase in tuition to enhance revenue. If GSU feels that raising tuition would enhance revenue, it is

Accepted Answer

A)  ignoring the law of demand.
B)  assuming that the demand for university education is elastic.
C)  assuming that the demand for university education is inelastic.
D)  assuming that the supply of university education is elastic.E) A) and B)
F) A) and C)

Question 17

If the cross-price elasticity of demand for two goods is -4.5, then

Accepted Answer

A)  the two goods are substitutes.
B)  the two goods are complements.
C)  one of the goods is normal while the other good is inferior.
D)  one of the goods is a luxury while the other good is a necessity.E) B) and C)
F) B) and D)

Question 18

Figure 5-9 
-Refer to Figure 5-9. Using the midpoint method, the price elasticity of demand between point C and point D is about

Accepted Answer

A)  0.29.
B)  0.54.
C)  1.86.
D)  2.0.E) A) and B)
F) None of the above

Question 19

If the price elasticity of demand for a good is 1, then a 3 percent decrease in price results in a

Accepted Answer

A)  0.1 percent increase in the quantity demanded.
B)  1 percent increase in the quantity demanded.
C)  3 percent increase in the quantity demanded.
D)  4 percent increase in the quantity demanded.E) C) and D)
F) B) and D)

Question 20

Suppose a farmer knows that he will be able to harvest and sell 3,000 bushels of wheat. Would he prefer a market in which conditions are favorable and most farmers harvest large crops or a market in which conditions are unfavorable and many farmers harvest small crops? Why?

Accepted Answer

The farmer prefers a market in...

Exam 5: Elasticity and Its Application

Suppose a market has the demand function Q^d=20-0.5P. Between which of the following price ranges is demand most inelastic?

Correct Answer
verified

Figure 5-10 -Refer to Figure 5-10. If rectangle D is larger than rectangle A, then

Correct Answer
verified

Tyler purchases 5 pounds of hot dogs per month when his monthly income is $2,000 and 4 pounds of hot dogs per month when his monthly income is $2,200. Tyler's income elasticity of demand for hot dogs is

Correct Answer
verified

Using the midpoint method, the price elasticity of demand for a good is computed to be approximately 2. Which of the following events is consistent with a 0.1 percent increase in the price of the good?

Correct Answer
verified

Elasticity is

Correct Answer
verified

Suppose a farmer knows that he will be able to harvest and sell 3,000 bushels of wheat. Would he prefer a market in which conditions are favorable and most farmers harvest large crops or a market in which conditions are unfavorable and many farmers harvest small crops? Why?

Correct Answer
verified
The farmer prefers a market in...
View Answer

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

Correct Answer
verified

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

Correct Answer
verified

Figure 5-9 -Refer to Figure 5-9. Using the midpoint method, the price elasticity of demand between point C and point D is about

Correct Answer
verified

If the quantity demanded of a certain good responds only slightly to a change in the price of the good, then the

Correct Answer
verified

Correct Answer
verified

When supply is perfectly elastic, the value of the price elasticity of supply is

Correct Answer
verified

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

Correct Answer
verified

Demand is said to be inelastic if the

Correct Answer
verified

If the price elasticity of demand for a good is 1, then a 3 percent decrease in price results in a

Correct Answer
verified

Get Smart University is contemplating an increase in tuition to enhance revenue. If GSU feels that raising tuition would enhance revenue, it 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

A government program that reduces land under cultivation can help farmers by raising prices but hurts consumers.

Correct Answer
verified

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

Correct Answer
verified

If the cross-price elasticity of demand for two goods is -4.5, then

Correct Answer
verified

Exam 5: Elasticity and Its Application

Suppose a market has the demand function Qd=20-0.5P. Between which of the following price ranges is demand most inelastic?

Correct AnswerverifiedShow Answer

Figure 5-10 -Refer to Figure 5-10. If rectangle D is larger than rectangle A, then

Correct AnswerverifiedShow Answer

Tyler purchases 5 pounds of hot dogs per month when his monthly income is $2,000 and 4 pounds of hot dogs per month when his monthly income is $2,200. Tyler's income elasticity of demand for hot dogs is

Correct AnswerverifiedShow Answer

Using the midpoint method, the price elasticity of demand for a good is computed to be approximately 2. Which of the following events is consistent with a 0.1 percent increase in the price of the good?

Correct AnswerverifiedShow Answer

Elasticity is

Correct AnswerverifiedShow Answer

Suppose a farmer knows that he will be able to harvest and sell 3,000 bushels of wheat. Would he prefer a market in which conditions are favorable and most farmers harvest large crops or a market in which conditions are unfavorable and many farmers harvest small crops? Why?

Correct AnswerverifiedThe farmer prefers a market in...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 5-9 -Refer to Figure 5-9. Using the midpoint method, the price elasticity of demand between point C and point D is about

Correct AnswerverifiedShow Answer

If the quantity demanded of a certain good responds only slightly to a change in the price of the good, then the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When supply is perfectly elastic, the value of the price elasticity of supply is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Demand is said to be inelastic if the

Correct AnswerverifiedShow Answer

If the price elasticity of demand for a good is 1, then a 3 percent decrease in price results in a

Correct AnswerverifiedShow Answer

Get Smart University is contemplating an increase in tuition to enhance revenue. If GSU feels that raising tuition would enhance revenue, it 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

A government program that reduces land under cultivation can help farmers by raising prices but hurts consumers.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the cross-price elasticity of demand for two goods is -4.5, then

Correct AnswerverifiedShow Answer

Suppose a market has the demand function Q^d=20-0.5P. Between which of the following price ranges is demand most inelastic?

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The farmer prefers a market in...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified
The price elasticity...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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