Question 1

Table 5-9
 
-Refer to Table 5-9. Which of the three supply curves represents the least elastic supply?

Accepted Answer

A)   supply curve A
B)   supply curve B
C)   supply curve C
D)   There is no difference in the elasticity of the three supply curves.E) A) and B)
F) A) and C)

Question 2

Studies indicate that the price elasticity of demand for cigarettes is about 0.4. A government policy aimed at reducing smoking changed the price of a pack of cigarettes from $2 to $6. According to the midpoint method, the government policy should have reduced smoking by

Accepted Answer

A)   30%.
B)   40%.
C)   80%.
D)   250%.E) A) and B)
F) A) and C)

Question 3

For a horizontal demand curve,

Accepted Answer

A)   the slope is undefined, and the price elasticity of demand is equal to 0.
B)   the slope is equal to 0, and the price elasticity of demand is undefined.
C)   both the slope and price elasticity of demand are undefined.
D)   both the slope and price elasticity of demand are equal to 0.E) A) and B)
F) None of the above

Question 4

Scenario 5-8
Consider the markets for mobile and landline telephone service. Suppose that when the average income of residents of Plainville is $55,000 per year, the quantity demanded of landline telephone service is 12,500 and the quantity demanded of mobile service is 28,000. Suppose that when the price of mobile service rises from $100 to $120 per month, the quantity demanded of landline service decreases to 11,000. Suppose also that when the average income increases to $60,000, the quantity demanded of mobile service increases to 33,000.
-Refer to Scenario 5-8. Using the midpoint method, what is the income elasticity of demand for mobile service?

Accepted Answer

The answer of Scenario 5-8
Consider the markets for mobile and...

Question 5

Suppose a market has the demand function Qd=20-0.5P. Using the midpoint method, what is the price elasticity of demand between $30 and $40?

Accepted Answer

The answer of Suppose a market has the demand function...

Question 6

Suppose the price elasticity of supply for cheese is 0.6 in the short run and 1.4 in the long run. If an increase in the demand for cheese causes the price of cheese to increase by 15%, then the quantity supplied of cheese will increase by

Accepted Answer

A)   0.4% in the short run and 4.6% in the long run.
B)   1.7% in the short run and 0.7% in the long run.
C)   9% in the short run and 21% in the long run.
D)   25% in the short run and 10.7% in the long run.E) A) and B)
F) A) and C)

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

Figure 5-10 
-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) None of the above

Question 9

If sellers do not adjust their quantity supplied at all in response to a change in price, the price elasticity of supply is

Accepted Answer

A)   zero, and the supply curve is horizontal.
B)   zero, and the supply curve is vertical.
C)   infinity, and the supply curve is horizontal.
D)   infinity, and the supply curve is vertical.E) All of the above
F) B) and C)

Question 10

Table 5-6
 
-Refer to Table 5-6. Using the midpoint method, demand is unit elastic when quantity demanded changes from

Accepted Answer

A)   500 to 400.
B)   400 to 300.
C)   300 to 200.
D)   200 to 100.E) A) and B)
F) B) and C)

Question 11

Which of the following is not possible?

Accepted Answer

A)   Demand is elastic, and a decrease in price causes an increase in revenue.
B)   Demand is unit elastic, and a decrease in price causes an increase in revenue.
C)   Demand is inelastic, and an increase in price causes an increase in revenue.
D)   Demand is perfectly inelastic, and an increase in price causes an increase in revenue.E) A) and D)
F) None of the above

Question 12

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

Question 13

How did the farm population in the United States change between 1950 and today?

Accepted Answer

A)   It dropped from 10 million to fewer than 3 million people.
B)   It dropped from 20 million to fewer than 5 million people.
C)   It dropped from 30 million to just over 6 million people.
D)   It increased from 10 million to almost 13 million people.E) A) and B)
F) B) and D)

Question 14

In general, demand curves for luxuries tend to be price elastic.

Accepted Answer

A) True 
 B)False

Question 15

Figure 5-14 
-Refer to Figure 5-14. Using the midpoint method, what is the price elasticity of supply between $16 and $40?

Accepted Answer

A)   0.125
B)   0.86
C)   1.0
D)   2.5E) A) and B)
F) All of the above

Question 16

The OPEC oil cartel has difficulty maintaining high prices in the long run because the supply of oil is more inelastic in the long run than in the short run.

Accepted Answer

A) True 
 B)False

Question 17

Figure 5-5 
-Refer to Figure 5-5. At a price of $50 per unit, sellers' total revenue equals

Accepted Answer

A)   $500.
B)   $750.
C)   $1000.
D)   $1250.E) None of the above
F) All of the above

Question 18

Holding all other factors constant and using the midpoint method, if a candy manufacturer increases production by 20 percent when the market price of candy increases from $0.50 to $0.60, then supply is

Accepted Answer

A)   inelastic, since the price elasticity of supply is equal to .91.
B)   inelastic, since the price elasticity of supply is equal to 1.1.
C)   elastic, since the price elasticity of supply is equal to 0.91.
D)   elastic, since the price elasticity of supply is equal to 1.1.E) All of the above
F) A) and D)

Question 19

Demand is said to be price elastic if

Accepted Answer

A)   the price of the good responds substantially to changes in demand.
B)   demand shifts substantially when income or the expected future price of the good changes.
C)   buyers do not respond much to changes in the price of the good.
D)   buyers respond substantially to changes in the price of the good.E) B) and C)
F) A) and B)

Question 20

For a particular good, a 12 percent increase in price causes a 3 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Accepted Answer

A)   There are many substitutes for this good.
B)   The good is a necessity.
C)   The market for the good is narrowly defined.
D)   The relevant time horizon is long.E) None of the above
F) A) and B)

Exam 5: Elasticity and Its Application

Suppose the price elasticity of supply for cheese is 0.6 in the short run and 1.4 in the long run. If an increase in the demand for cheese causes the price of cheese to increase by 15%, then the quantity supplied of cheese will increase by

Correct Answer
verified

Holding all other factors constant and using the midpoint method, if a candy manufacturer increases production by 20 percent when the market price of candy increases from $0.50 to $0.60, then supply is

Correct Answer
verified

Table 5-6 -Refer to Table 5-6. Using the midpoint method, demand is unit elastic when quantity demanded changes from

Correct Answer
verified

Correct Answer
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Figure 5-14 -Refer to Figure 5-14. Using the midpoint method, what is the price elasticity of supply between $16 and $40?

Correct Answer
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Table 5-9 -Refer to Table 5-9. Which of the three supply curves represents the least elastic supply?

Correct Answer
verified

In general, demand curves for luxuries tend to be price elastic.

Correct Answer
verified

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

Which of the following is not possible?

Correct Answer
verified

How did the farm population in the United States change between 1950 and today?

Correct Answer
verified

For a horizontal demand curve,

Correct Answer
verified

Figure 5-5 -Refer to Figure 5-5. At a price of $50 per unit, sellers' total revenue equals

Correct Answer
verified

Studies indicate that the price elasticity of demand for cigarettes is about 0.4. A government policy aimed at reducing smoking changed the price of a pack of cigarettes from $2 to $6. According to the midpoint method, the government policy should have reduced smoking by

Correct Answer
verified

If sellers do not adjust their quantity supplied at all in response to a change in price, the price elasticity of supply is

Correct Answer
verified

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

Correct Answer
verified

Demand is said to be price elastic if

Correct Answer
verified

The OPEC oil cartel has difficulty maintaining high prices in the long run because the supply of oil is more inelastic in the long run than in the short run.

Correct Answer
verified

Suppose a market has the demand function Qd=20-0.5P. Using the midpoint method, what is the price elasticity of demand between $30 and $40?

Correct Answer
verified

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

Correct Answer
verified

For a particular good, a 12 percent increase in price causes a 3 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Correct Answer
verified

Exam 5: Elasticity and Its Application

Suppose the price elasticity of supply for cheese is 0.6 in the short run and 1.4 in the long run. If an increase in the demand for cheese causes the price of cheese to increase by 15%, then the quantity supplied of cheese will increase by

Correct AnswerverifiedShow Answer

Holding all other factors constant and using the midpoint method, if a candy manufacturer increases production by 20 percent when the market price of candy increases from $0.50 to $0.60, then supply is

Correct AnswerverifiedShow Answer

Table 5-6 -Refer to Table 5-6. Using the midpoint method, demand is unit elastic when quantity demanded changes from

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 5-14 -Refer to Figure 5-14. Using the midpoint method, what is the price elasticity of supply between $16 and $40?

Correct AnswerverifiedShow Answer

Table 5-9 -Refer to Table 5-9. Which of the three supply curves represents the least elastic supply?

Correct AnswerverifiedShow Answer

In general, demand curves for luxuries tend to be price elastic.

Correct AnswerverifiedShow 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

Which of the following is not possible?

Correct AnswerverifiedShow Answer

How did the farm population in the United States change between 1950 and today?

Correct AnswerverifiedShow Answer

For a horizontal demand curve,

Correct AnswerverifiedShow Answer

Figure 5-5 -Refer to Figure 5-5. At a price of $50 per unit, sellers' total revenue equals

Correct AnswerverifiedShow Answer

Studies indicate that the price elasticity of demand for cigarettes is about 0.4. A government policy aimed at reducing smoking changed the price of a pack of cigarettes from $2 to $6. According to the midpoint method, the government policy should have reduced smoking by

Correct AnswerverifiedShow Answer

If sellers do not adjust their quantity supplied at all in response to a change in price, the price elasticity of supply is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Demand is said to be price elastic if

Correct AnswerverifiedShow Answer

The OPEC oil cartel has difficulty maintaining high prices in the long run because the supply of oil is more inelastic in the long run than in the short run.

Correct AnswerverifiedShow Answer

Suppose a market has the demand function Qd=20-0.5P. Using the midpoint method, what is the price elasticity of demand between $30 and $40?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

For a particular good, a 12 percent increase in price causes a 3 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Correct AnswerverifiedShow Answer

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