Question 1

Which of the following statements helps to explain why government drug interdiction increases drug-related crime?

Accepted Answer

A)  The direct impact is on buyers, not sellers.
B)  Successful drug interdiction policies reduce the demand for illegal drugs.
C)  Drug addicts will have an even greater need for quick cash to support their habits.
D)  In the short run, both equilibrium quantities and prices will fall in the markets for illegal drugs.E) A) and C)
F) None of the above

Question 2

For a particular good, a 2 percent increase in price causes a 12 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Accepted Answer

A)  There are no close substitutes for this good.
B)  The good is a luxury.
C)  The market for the good is broadly defined.
D)  The relevant time horizon is short.E) A) and C)
F) A) and D)

Question 3

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) None of the above
F) All of the above

Question 4

When quantity moves proportionately the same amount as price, demand is

Accepted Answer

A)  elastic, and the price elasticity of demand is 1.
B)  perfectly elastic, and the price elasticity of demand is infinitely large.
C)  perfectly inelastic, and the price elasticity of demand is 0.
D)  unit elastic, and the price elasticity of demand is 1.E) B) and C)
F) A) and D)

Question 5

Suppose demand is given by the equation:  At what price will total revenue be maximized?

Accepted Answer

Total revenue will be maximize...

Question 6

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

Question 7

To determine whether a good is considered normal or inferior, one could examine the value of the

Accepted Answer

A)  income elasticity of demand for that good.
B)  price elasticity of demand for that good.
C)  price elasticity of supply for that good.
D)  cross-price elasticity of demand for that good.E) A) and B)
F) A) and C)

Question 8

If the price elasticity of demand for a good is 5, then a 10 percent increase in price results in a

Accepted Answer

A)  0.5 percent decrease in the quantity demanded.
B)  2 percent decrease in the quantity demanded.
C)  5 percent decrease in the quantity demanded.
D)  50 percent decrease in the quantity demanded.E) None of the above
F) B) and C)

Question 9

If a firm that produces honey is facing elastic demand, then the firm would decrease price to increase revenue.

Accepted Answer

A) True 
 B)False

Question 10

Table 5-3
Consider the following demand schedule. 
-Refer to Table 5-3. Using the midpoint method, what is the price elasticity of demand between $12 and $15?

Accepted Answer

The answer of Table 5-3
Consider the following demand schedule. 
-Refer...

Question 11

If sellers respond to very small changes in price by adjusting their quantity supplied by extremely large amounts, the price elasticity of supply approaches

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

Question 12

Suppose that quantity demand rises by 10% as a result of a 15% decrease in price. The price elasticity of demand for this good is

Accepted Answer

A)  inelastic and equal to 0.67.
B)  elastic and equal to 0.67.
C)  inelastic and equal to 1.50.
D)  elastic and equal to 1.50.E) All of the above
F) None of the above

Question 13

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

Accepted Answer

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

Question 14

Figure 5-14 
-Refer to Figure 5-14. Using the midpoint method, what is the price elasticity of supply between $100 and $220?

Accepted Answer

A)  0.58
B)  0.67
C)  1.00
D)  1.73E) A) and D)
F) None of the above

Question 15

Which of the following statements is correct?

Accepted Answer

A)  The demand for medicine is more elastic than the demand for sailboats.
B)  The demand for iPads is more elastic than the demand for tablets in general.
C)  The demand for cell phones is more elastic over a short period of time than over a long period of time.
D)  All of the above are correct.E) A) and D)
F) A) and B)

Question 16

Whether a good is a luxury or necessity depends on the

Accepted Answer

A)  price of the good.
B)  preferences of the buyer.
C)  intrinsic properties of the good.
D)  scarcity of the good.E) None of the above
F) All of the above

Question 17

Along the elastic portion of a linear demand curve, total revenue rises as price rises.

Accepted Answer

A) True 
 B)False

Question 18

Figure 5-15 
-Refer to Figure 5-15. Using the midpoint method, what is the price elasticity of supply between points D and G?

Accepted Answer

A)  1.89
B)  1.26
C)  0.53
D)  0.34E) B) and C)
F) A) and D)

Question 19

Which of the following statements is correct?

Accepted Answer

A)  Advocates for drug-interdiction policies that reduce the supply of illegal drugs argue that the demand for illegal drugs may be more responsive in the long run than in the short run.
B)  The demand for illegal drugs is price inelastic.
C)  Drug interdiction efforts that reduce the supply of illegal drugs may increase drug-related crimes.
D)  All of the above are correct.E) B) and C)
F) B) and D)

Question 20

Suppose that 300 bottles of soda are demanded at a particular price. If the price of a bottle of soda rises from that price by 6 percent, the number of bottles of soda demanded falls to 275. Using the midpoint approach to calculate the price elasticity of demand, it follows that the

Accepted Answer

A)  demand for bottles of soda in this price range is perfectly elastic.
B)  price increase will increase the total revenue of soda sellers.
C)  price elasticity of demand for bottles of soda in this price range is about 0.69.
D)  price elasticity of demand for bottles of soda in this price range is about 1.45.E) C) and D)
F) A) and B)

Exam 5: Elasticity and Its Application

Table 5-3 Consider the following demand schedule. -Refer to Table 5-3. Using the midpoint method, what is the price elasticity of demand between $12 and $15?

Correct Answer
verified

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
verified

If sellers respond to very small changes in price by adjusting their quantity supplied by extremely large amounts, the price elasticity of supply approaches

Correct Answer
verified

If the price elasticity of demand for a good is 5, then a 10 percent increase in price results in a

Correct Answer
verified

To determine whether a good is considered normal or inferior, one could examine the value of the

Correct Answer
verified

Correct Answer
verified

Along the elastic portion of a linear demand curve, total revenue rises as price rises.

Correct Answer
verified

Whether a good is a luxury or necessity depends on the

Correct Answer
verified

Suppose that quantity demand rises by 10% as a result of a 15% decrease in price. The price elasticity of demand for this good is

Correct Answer
verified

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

Correct Answer
verified

When quantity moves proportionately the same amount as price, demand is

Correct Answer
verified

If a firm that produces honey is facing elastic demand, then the firm would decrease price to increase revenue.

Correct Answer
verified

Figure 5-14 -Refer to Figure 5-14. Using the midpoint method, what is the price elasticity of supply between $100 and $220?

Correct Answer
verified

Suppose that 300 bottles of soda are demanded at a particular price. If the price of a bottle of soda rises from that price by 6 percent, the number of bottles of soda demanded falls to 275. Using the midpoint approach to calculate the price elasticity of demand, it follows that the

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

Suppose demand is given by the equation: At what price will total revenue be maximized?

Correct Answer
verified
Total revenue will be maximize...
View Answer

Figure 5-15 -Refer to Figure 5-15. Using the midpoint method, what is the price elasticity of supply between points D and G?

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

Which of the following statements helps to explain why government drug interdiction increases drug-related crime?

Correct Answer
verified

For a particular good, a 2 percent increase in price causes a 12 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

Table 5-3 Consider the following demand schedule. -Refer to Table 5-3. Using the midpoint method, what is the price elasticity of demand between $12 and $15?

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

If sellers respond to very small changes in price by adjusting their quantity supplied by extremely large amounts, the price elasticity of supply approaches

Correct AnswerverifiedShow Answer

If the price elasticity of demand for a good is 5, then a 10 percent increase in price results in a

Correct AnswerverifiedShow Answer

To determine whether a good is considered normal or inferior, one could examine the value of the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Along the elastic portion of a linear demand curve, total revenue rises as price rises.

Correct AnswerverifiedShow Answer

Whether a good is a luxury or necessity depends on the

Correct AnswerverifiedShow Answer

Suppose that quantity demand rises by 10% as a result of a 15% decrease in price. The price elasticity of demand for this good is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When quantity moves proportionately the same amount as price, demand is

Correct AnswerverifiedShow Answer

If a firm that produces honey is facing elastic demand, then the firm would decrease price to increase revenue.

Correct AnswerverifiedShow Answer

Figure 5-14 -Refer to Figure 5-14. Using the midpoint method, what is the price elasticity of supply between $100 and $220?

Correct AnswerverifiedShow Answer

Suppose that 300 bottles of soda are demanded at a particular price. If the price of a bottle of soda rises from that price by 6 percent, the number of bottles of soda demanded falls to 275. Using the midpoint approach to calculate the price elasticity of demand, it follows that the

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Suppose demand is given by the equation: At what price will total revenue be maximized?

Correct AnswerverifiedTotal revenue will be maximize...View AnswerShow Answer

Figure 5-15 -Refer to Figure 5-15. Using the midpoint method, what is the price elasticity of supply between points D and G?

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Which of the following statements helps to explain why government drug interdiction increases drug-related crime?

Correct AnswerverifiedShow Answer

For a particular good, a 2 percent increase in price causes a 12 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Correct AnswerverifiedShow Answer

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Total revenue will be maximize...
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