Question 1

If the price elasticity of demand for a good is 0.8, then a 12 percent increase in the quantity demanded must be the result of

Accepted Answer

A)  a 0.06 percent decrease in the price.
B)  a 1.5 percent decrease in the price.
C)  a 9.6 percent decrease in the price.
D)  a 15 percent decrease in the price.E) All of the above
F) B) and D)

Question 2

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) None of the above
F) C) and D)

Question 3

Figure 5-4 
-Refer to Figure 5-4. The section of the demand curve from B to C represents the

Accepted Answer

A)  elastic section of the demand curve.
B)  inelastic section of the demand curve.
C)  unit elastic section of the demand curve.
D)  perfectly elastic section of the demand curve.E) C) and D)
F) A) and B)

Question 4

When studying how some event or policy affects a market, elasticity provides information on the

Accepted Answer

A)  equity effects on the market by identifying the winners and losers.
B)  magnitude of the effect on the market.
C)  speed of adjustment of the market in response to the event or policy.
D)  number of market participants who are directly affected by the event or policy.E) B) and D)
F) B) and C)

Question 5

Scenario 5-2
Suppose the demand function for good X is given by:  where  is the quantity demanded of good X,  is the price of good X, and  is the price of good Y, which is related to good X.
-Refer to Scenario 5-2. Using the midpoint method, if the price of good Y is $10 and the price of good X decreases from $5 to $3, what is the price elasticity of demand for good X? Is the demand elastic, unitary elastic, or inelastic?

Accepted Answer

The answer of Scenario 5-2
Suppose the demand function for good...

Question 6

Suppose that when the price of wheat is $2 per bushel, farmers can sell 10 million bushels. When the price of wheat is $3 per bushel, farmers can sell 8 million bushels. Which of the following statements is true? The demand for wheat is

Accepted Answer

A)  income inelastic, so an increase in the price of wheat will increase the total revenue of wheat farmers.
B)  income elastic, so an increase in the price of wheat will increase the total revenue of wheat farmers.
C)  price inelastic, so an increase in the price of wheat will increase the total revenue of wheat farmers.
D)  price elastic, so an increase in the price of wheat will increase the total revenue of wheat farmers.E) A) and C)
F) All of the above

Question 7

When demand is perfectly inelastic, the demand curve will be

Accepted Answer

A)  negatively sloped, because buyers decrease their purchases when the price rises.
B)  vertical, because buyers purchase the same amount as before whenever the price rises or falls.
C)  positively sloped, because buyers increase their purchases when price rises.
D)  positively sloped, because buyers increase their total expenditures when price rises.E) B) and C)
F) A) and C)

Question 8

Which of the following is not a determinant of the price elasticity of demand for a good?

Accepted Answer

A)  the time horizon
B)  the steepness or flatness of the supply curve for the good
C)  the definition of the market for the good
D)  the availability of substitutes for the goodE) A) and B)
F) A) and C)

Question 9

Generally, a firm is more willing and able to increase quantity supplied in response to a price change when

Accepted Answer

A)  the relevant time period is short rather than long.
B)  the relevant time period is long rather than short.
C)  supply is inelastic.
D)  the firm is experiencing capacity problems.E) A) and C)
F) All of the above

Question 10

Table 5-8 
-Refer to Table 5-8. Using the midpoint method, the income elasticity of demand for good Y is

Accepted Answer

A)  2.33, and good Y is a normal good.
B)  -2.33, and good Y is an inferior good.
C)  -0.43, and good Y is a normal good.
D)  -0.43, and good Y is an inferior good.E) A) and D)
F) A) and C)

Question 11

Figure 5-1 
-Refer to Figure 5-1. 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) C) and D)
F) B) and D)

Question 12

Table 5-12 
-Refer to Table 5-12. Using the midpoint method, what is the price elasticity of demand between $2 and $4?

Accepted Answer

The price ...

Question 13

Scenario 5-2
Suppose the demand function for good X is given by:  where  is the quantity demanded of good X,  is the price of good X, and  is the price of good Y, which is related to good X.
-Refer to Scenario 5-2. Good X and Good Y are related as

Accepted Answer

The answer of Scenario 5-2
Suppose the demand function for good...

Question 14

Suppose the price elasticity of demand for a product is 1. If a supplier wants to increase revenue, what change should it make to price, if any?

Accepted Answer

No change,...

Question 15

Scenario 5-1
Suppose that when the average college student's income is $10,000 per year, the annual quantity demanded of Patty's Pizza is 50 and the annual quantity demanded of Sue's Subs is 80. Suppose that when the price of Patty's Pizza increases from $8 to $10 per pie, the quantity demanded of Sue's Subs increases from 80 to 100. Suppose also that when the average student's income increases to $12,000 per year, the annual quantity demanded of Patty's Pizza increases from 50 to 60.
-Refer to Scenario 5-1. Using the midpoint method, what is the income elasticity of demand for pizza and what does the value indicate about the demand for pizza?

Accepted Answer

A)  The income elasticity is 0.18 so pizza is a normal good.
B)  The income elasticity is -1 so pizza is an inferior good.
C)  The income elasticity is 1 so pizza is unitary elastic.
D)  The income elasticity is 1 so pizza is a normal good.E) None of the above
F) A) and D)

Question 16

Table 5-10
​
​  ​
-Refer to Table 5-10. Using the midpoint method, which of the three supply curves has the most inelastic price elasticity of supply?

Accepted Answer

A)  Supply curve X
B)  Supply curve Y
C)  Supply curve Z
D)  There is no difference in the elasticities of the three supply curves.E) A) and C)
F) A) and B)

Question 17

What is the price elasticity of demand at any point on a perfectly elastic demand curve?

Accepted Answer

The price ...

Question 18

For a particular good, a 5 percent increase in price causes a 15 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 broadly defined.
D)  The relevant time horizon is short.E) B) and C)
F) None of the above

Question 19

Marcus says that he would smoke one pack of cigarettes each day regardless of the price. If he is telling the truth, Marcus's

Accepted Answer

A)  demand for cigarettes is perfectly inelastic.
B)  price elasticity of demand for cigarettes is infinite.
C)  income elasticity of demand for cigarettes is 0.
D)  More than one of the above is correct.E) B) and D)
F) B) and C)

Question 20

A perfectly inelastic demand implies that buyers

Accepted Answer

A)  decrease their purchases when the price rises.
B)  purchase the same amount as before when the price rises or falls.
C)  increase their purchases only slightly when the price falls.
D)  respond substantially to an increase in price.E) B) and C)
F) A) and B)

Exam 5: Elasticity and Its Application

A perfectly inelastic demand implies that buyers

Correct Answer
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When demand is perfectly inelastic, the demand curve will be

Correct Answer
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For a particular good, a 5 percent increase in price causes a 15 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Correct Answer
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Table 5-12 -Refer to Table 5-12. Using the midpoint method, what is the price elasticity of demand between $2 and $4?

Correct Answer
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The price ...
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Figure 5-4 -Refer to Figure 5-4. The section of the demand curve from B to C represents the

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

Correct Answer
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Figure 5-1 -Refer to Figure 5-1. Between point A and point B on the graph, demand is

Correct Answer
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What is the price elasticity of demand at any point on a perfectly elastic demand curve?

Correct Answer
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The price ...
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Table 5-8 -Refer to Table 5-8. Using the midpoint method, the income elasticity of demand for good Y is

Correct Answer
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Generally, a firm is more willing and able to increase quantity supplied in response to a price change when

Correct Answer
verified

Table 5-10 -Refer to Table 5-10. Using the midpoint method, which of the three supply curves has the most inelastic price elasticity of supply?

Correct Answer
verified

Correct Answer
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If the price elasticity of demand for a good is 0.8, then a 12 percent increase in the quantity demanded must be the result of

Correct Answer
verified

Marcus says that he would smoke one pack of cigarettes each day regardless of the price. If he is telling the truth, Marcus's

Correct Answer
verified

Which of the following is not a determinant of the price elasticity of demand for a good?

Correct Answer
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Correct Answer
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Suppose the price elasticity of demand for a product is 1. If a supplier wants to increase revenue, what change should it make to price, if any?

Correct Answer
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No change,...
View Answer

Scenario 5-2 Suppose the demand function for good X is given by: where is the quantity demanded of good X, is the price of good X, and is the price of good Y, which is related to good X. -Refer to Scenario 5-2. Good X and Good Y are related as

Correct Answer
verified

When studying how some event or policy affects a market, elasticity provides information on the

Correct Answer
verified

Suppose that when the price of wheat is $2 per bushel, farmers can sell 10 million bushels. When the price of wheat is $3 per bushel, farmers can sell 8 million bushels. Which of the following statements is true? The demand for wheat is

Correct Answer
verified

Exam 5: Elasticity and Its Application

A perfectly inelastic demand implies that buyers

Correct AnswerverifiedShow Answer

When demand is perfectly inelastic, the demand curve will be

Correct AnswerverifiedShow Answer

For a particular good, a 5 percent increase in price causes a 15 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Correct AnswerverifiedShow Answer

Table 5-12 -Refer to Table 5-12. Using the midpoint method, what is the price elasticity of demand between $2 and $4?

Correct AnswerverifiedThe price ...View AnswerShow Answer

Figure 5-4 -Refer to Figure 5-4. The section of the demand curve from B to C represents the

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

Figure 5-1 -Refer to Figure 5-1. Between point A and point B on the graph, demand is

Correct AnswerverifiedShow Answer

What is the price elasticity of demand at any point on a perfectly elastic demand curve?

Correct AnswerverifiedThe price ...View AnswerShow Answer

Table 5-8 -Refer to Table 5-8. Using the midpoint method, the income elasticity of demand for good Y is

Correct AnswerverifiedShow Answer

Generally, a firm is more willing and able to increase quantity supplied in response to a price change when

Correct AnswerverifiedShow Answer

Table 5-10 ​ ​ ​ -Refer to Table 5-10. Using the midpoint method, which of the three supply curves has the most inelastic price elasticity of supply?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If the price elasticity of demand for a good is 0.8, then a 12 percent increase in the quantity demanded must be the result of

Correct AnswerverifiedShow Answer

Marcus says that he would smoke one pack of cigarettes each day regardless of the price. If he is telling the truth, Marcus's

Correct AnswerverifiedShow Answer

Which of the following is not a determinant of the price elasticity of demand for a good?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose the price elasticity of demand for a product is 1. If a supplier wants to increase revenue, what change should it make to price, if any?

Correct AnswerverifiedNo change,...View AnswerShow Answer

Scenario 5-2 Suppose the demand function for good X is given by: where is the quantity demanded of good X, is the price of good X, and is the price of good Y, which is related to good X. -Refer to Scenario 5-2. Good X and Good Y are related as

Correct AnswerverifiedShow Answer

When studying how some event or policy affects a market, elasticity provides information on the

Correct AnswerverifiedShow Answer

Suppose that when the price of wheat is $2 per bushel, farmers can sell 10 million bushels. When the price of wheat is $3 per bushel, farmers can sell 8 million bushels. Which of the following statements is true? The demand for wheat is

Correct AnswerverifiedShow Answer

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The price ...
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The price ...
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Correct Answer
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Correct Answer
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Table 5-10 -Refer to Table 5-10. Using the midpoint method, which of the three supply curves has the most inelastic price elasticity of supply?

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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No change,...
View Answer

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