Question 1

If the price elasticity of demand for a good is 0.2, then a 3 percent decrease in price results in a

Accepted Answer

A)   0.6 percent increase in the quantity demanded.
B)   1.5 percent increase in the quantity demanded.
C)   2 percent increase in the quantity demanded.
D)   6 percent increase in the quantity demanded.E) B) and C)
F) A) and D)

Question 2

Scenario 5-7
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 5-7. Using the midpoint method, if the price of good X is $10 and the price of good Y increases from $8 to $10, the cross price elasticity of demand is about

Accepted Answer

The answer of Scenario 5-7
Suppose the demand function for good...

Question 3

For which of the following goods would demand be most price elastic: a car, a sedan, a Honda sedan, a Honda Accord, a black Honda Accord?

Accepted Answer

a black Ho...

Question 4

Figure 5-16 
-Refer to Figure 5-16. Using the midpoint method, what is the price elasticity of supply between $6 and $8?

Accepted Answer

A)   0.86
B)   1.00
C)   1.17
D)   1.25E) B) and D)
F) B) and C)

Question 5

If a t-shirt manufacturer supplies 1,000 t-shirts per week when the price of t-shirts is $10 and supplies 1,200 t-shirts per week when the price of t-shirts is $12, the price elasticity of supply is 2.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A)   mint-flavored toothpaste
B)   toothpaste
C)   Colgate mint-flavored toothpaste
D)   a generic mint-flavored toothpasteE) B) and D)
F) All of the above

Question 7

If the price elasticity of supply is 0.8, and price increased by 5%, quantity supplied would

Accepted Answer

A)   increase by 4%.
B)   increase by 6.25%.
C)   decrease by 4%.
D)   decrease by 6.25%.E) All of the above
F) A) and C)

Question 8

When a supply curve is relatively flat, the

Accepted Answer

A)   sellers are not at all responsive to a change in price.
B)   equilibrium price changes substantially when the demand for the good changes.
C)   supply is relatively elastic.
D)   supply is relatively inelastid.E) All of the above
F) A) and C)

Question 9

The demand for desserts tends to be more inelastic than the demand for red velvet cake.

Accepted Answer

A) True 
 B)False

Question 10

Suppose that Juan Carlos is filling out a survey that he received in the mail. The survey asks him what he would do if the price of his favorite toothpaste increased. Juan Carlos reports that he would switch to a different brand. The survey asks what he would do if the price of all toothpastes increased. Juan Carlos reports that he must use toothpaste, so he would have to adjust his spending elsewhere. These examples illustrate the importance of

Accepted Answer

A)   changes in total revenue in determining the price elasticity of demand.
B)   a necessity versus a luxury in determining the price elasticity of demand.
C)   the definition of a market in determining the price elasticity of demand.
D)   the time horizon in determining the price elasticity of demand.E) B) and C)
F) All of the above

Question 11

Figure 5-21 
-If a supply curve is perfectly vertical, what is the value of the price elasticity of supply?

Accepted Answer

The answer of Figure 5-21 
-If a supply curve is...

Question 12

Table 5-7
The following table shows a portion of the demand schedule for a particular good at various levels of income.
 
-Refer to Table 5-7. Using the midpoint method, at a price of $12, what is the income elasticity of demand when income rises from $5,000 to $10,000?

Accepted Answer

A)   0.00
B)   0.41
C)   1.00
D)   2.45E) B) and C)
F) A) and B)

Question 13

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

Question 14

The income elasticity of demand for caviar tends to be

Accepted Answer

A)   high because caviar is relatively expensive.
B)   low because caviar is packaged in small containers.
C)   high because buyers generally feel that they can do without it.
D)   low because it is almost always in short supply.E) None of the above
F) All of the above

Question 15

A discovery that increases wheat yields per acre helps farmers by increasing both supply and total revenues.

Accepted Answer

A) True 
 B)False

Question 16

If the price elasticity of demand for apples is 0.8, then a 2.4% increase in the price of apples will decrease the quantity demanded of apples by

Accepted Answer

A)   1.92%, and apples sellers' total revenue will increase as a result.
B)   1.92%, and apples sellers' total revenue will decrease as a result.
C)   3%, and apples sellers' total revenue will increase as a result.
D)   3%, and apples sellers' total revenue will decrease as a result.E) B) and C)
F) A) and B)

Question 17

If a 20% increase in price for a good results in a 15% decrease in quantity demanded, the price elasticity of demand is

Accepted Answer

A)   0.75.
B)   1.25.
C)   1.33.
D)   1.60.E) B) and C)
F) A) and B)

Question 18

Table 5-10
 
-Refer to Table 5-10. Using the midpoint method, which of the three supply curves has the most elastic 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 elasticity of the three supply curves.E) C) and D)
F) B) and D)

Question 19

You are in charge of the local city-owned aquatic center. You need to increase the revenue generated by the aquatic center to meet expenses. The mayor advises you to increase the price of a day pass. The city manager recommends reducing the price of a day pass. You realize that

Accepted Answer

A)   the mayor thinks demand is elastic, and the city manager thinks demand is inelastic.
B)   both the mayor and the city manager think that demand is elastic.
C)   both the mayor and the city manager think that demand is inelastic.
D)   the mayor thinks demand is inelastic, and the city manager thinks demand is elastid.E) All of the above
F) B) and D)

Question 20

For a particular good, a 5 percent increase in price causes a 2 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Accepted Answer

A)   There are many 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 long.E) A) and C)
F) B) and C)

Exam 5: Elasticity and Its Application

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

Correct Answer
verified

The demand for desserts tends to be more inelastic than the demand for red velvet cake.

Correct Answer
verified

The income elasticity of demand for caviar tends to be

Correct Answer
verified

If a 20% increase in price for a good results in a 15% decrease in quantity demanded, the price elasticity of demand is

Correct Answer
verified

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

Correct Answer
verified

For which of the following goods would demand be most price elastic: a car, a sedan, a Honda sedan, a Honda Accord, a black Honda Accord?

Correct Answer
verified
a black Ho...
View Answer

When a supply curve is relatively flat, the

Correct Answer
verified

Table 5-7 The following table shows a portion of the demand schedule for a particular good at various levels of income. -Refer to Table 5-7. Using the midpoint method, at a price of $12, what is the income elasticity of demand when income rises from $5,000 to $10,000?

Correct Answer
verified

If a t-shirt manufacturer supplies 1,000 t-shirts per week when the price of t-shirts is $10 and supplies 1,200 t-shirts per week when the price of t-shirts is $12, the price elasticity of supply is 2.

Correct Answer
verified

If the price elasticity of demand for a good is 0.2, then a 3 percent decrease in price results in a

Correct Answer
verified

Figure 5-16 -Refer to Figure 5-16. Using the midpoint method, what is the price elasticity of supply between $6 and $8?

Correct Answer
verified

You are in charge of the local city-owned aquatic center. You need to increase the revenue generated by the aquatic center to meet expenses. The mayor advises you to increase the price of a day pass. The city manager recommends reducing the price of a day pass. You realize that

Correct Answer
verified

For a particular good, a 5 percent increase in price causes a 2 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Correct Answer
verified

If the price elasticity of demand for apples is 0.8, then a 2.4% increase in the price of apples will decrease the quantity demanded of apples by

Correct Answer
verified

Correct Answer
verified

If the price elasticity of supply is 0.8, and price increased by 5%, quantity supplied would

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

A discovery that increases wheat yields per acre helps farmers by increasing both supply and total revenues.

Correct Answer
verified

Figure 5-21 -If a supply curve is perfectly vertical, what is the value of the price elasticity of supply?

Correct Answer
verified

Exam 5: Elasticity and Its Application

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

Correct AnswerverifiedShow Answer

The demand for desserts tends to be more inelastic than the demand for red velvet cake.

Correct AnswerverifiedShow Answer

The income elasticity of demand for caviar tends to be

Correct AnswerverifiedShow Answer

If a 20% increase in price for a good results in a 15% decrease in quantity demanded, the price elasticity of demand is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

For which of the following goods would demand be most price elastic: a car, a sedan, a Honda sedan, a Honda Accord, a black Honda Accord?

Correct Answerverifieda black Ho...View AnswerShow Answer

When a supply curve is relatively flat, the

Correct AnswerverifiedShow Answer

Table 5-7 The following table shows a portion of the demand schedule for a particular good at various levels of income. -Refer to Table 5-7. Using the midpoint method, at a price of $12, what is the income elasticity of demand when income rises from $5,000 to $10,000?

Correct AnswerverifiedShow Answer

If a t-shirt manufacturer supplies 1,000 t-shirts per week when the price of t-shirts is $10 and supplies 1,200 t-shirts per week when the price of t-shirts is $12, the price elasticity of supply is 2.

Correct AnswerverifiedShow Answer

If the price elasticity of demand for a good is 0.2, then a 3 percent decrease in price results in a

Correct AnswerverifiedShow Answer

Figure 5-16 -Refer to Figure 5-16. Using the midpoint method, what is the price elasticity of supply between $6 and $8?

Correct AnswerverifiedShow Answer

You are in charge of the local city-owned aquatic center. You need to increase the revenue generated by the aquatic center to meet expenses. The mayor advises you to increase the price of a day pass. The city manager recommends reducing the price of a day pass. You realize that

Correct AnswerverifiedShow Answer

For a particular good, a 5 percent increase in price causes a 2 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Correct AnswerverifiedShow Answer

If the price elasticity of demand for apples is 0.8, then a 2.4% increase in the price of apples will decrease the quantity demanded of apples by

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If the price elasticity of supply is 0.8, and price increased by 5%, quantity supplied would

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A discovery that increases wheat yields per acre helps farmers by increasing both supply and total revenues.

Correct AnswerverifiedShow Answer

Figure 5-21 -If a supply curve is perfectly vertical, what is the value of the price elasticity of supply?

Correct AnswerverifiedShow Answer

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a black Ho...
View Answer

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