Question 1

Which of the following could be the price elasticity of demand for a good for which an increase in price would increase revenue?

Accepted Answer

A)   0.3
B)   1
C)   1.8
D)   None of the above could be correct.E) All of the above
F) A) and D)

Question 2

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

Accepted Answer

A)   lattés
B)   doctor's visits
C)   eggs
D)   natural gasE) B) and C)
F) A) and D)

Question 3

Holding all other forces constant, when the price of gasoline rises, the number of gallons of gasoline demanded would fall substantially over a ten-year period because

Accepted Answer

A)   buyers tend to be much less sensitive to a change in price when given more time to react.
B)   buyers tend to be much more sensitive to a change in price when given more time to react.
C)   buyers will have substantially more real income over a ten-year period.
D)   the quantity supplied of gasoline increases very little in response to an increase in the price of gasoline.E) None of the above
F) A) and B)

Question 4

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) None of the above
F) A) and B)

Question 5

When quantity demanded responds strongly to changes in price, demand is said to be

Accepted Answer

A)   fluid.
B)   elastic.
C)   dynamic.
D)   highly variable.E) B) and C)
F) A) and C)

Question 6

If the price of natural gas rises, when is the price elasticity of demand likely to be the highest?

Accepted Answer

A)   immediately after the price increase
B)   one month after the price increase
C)   three months after the price increase
D)   one year after the price increaseE) B) and C)
F) A) and D)

Question 7

On a certain supply curve, one point is (quantity supplied = 200, price = $2.00)  and another point is (quantity supplied= 250, price = $2.50) . Using the midpoint method, the price elasticity of supply is about

Accepted Answer

A)   0.2.
B)   0.5.
C)   1.0.
D)   2.5.E) A) and C)
F) None of the above

Question 8

A t-shirt maker would be willing to supply 75 t-shirts per day at a price of $18.00 each. At a price of $20.00, the t- shirt maker would be willing to supply 100 t-shirts. Using the midpoint method, the price elasticity of supply for t- shirts is about

Accepted Answer

A)   0.37, and supply is elastic.
B)   0.37, and supply is inelastic.
C)   2.71, and supply is elastic.
D)   2.71, and supply is inelastid.E) B) and C)
F) A) and D)

Question 9

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, the cross price elasticity of demand is

Accepted Answer

A)   about 0.22, and the two goods are substitutes.
B)   about -0.005, and the two goods are complements.
C)   1, and the two goods are substitutes.
D)   1, and the two goods are unitary elastid.E) B) and D)
F) C) and D)

Question 10

While in college, Marty and Laura each buy 15 bus tickets per month. After they graduate and have full-time jobs, Marty buys 0 bus tickets per month and Laura buys 28 bus tickets per month. Comparing income elasticity of demand for bus tickets, Marty's

Accepted Answer

A)   is negative, and Laura's is positive.
B)   is positive, and Laura's is negative.
C)   is zero, and Laura's is positive.
D)   is zero, and Laura's is negative.E) A) and B)
F) A) and C)

Question 11

A bakery would be willing to supply 500 bagels per day at a price of $0.50 each. At a price of $0.80, the bakery would be willing to supply 1,100 bagels. Using the midpoint method, the price elasticity of supply for bagels is about

Accepted Answer

A)   0.62.
B)   0.77.
C)   1.24.
D)   1.63.E) None of the above
F) B) and C)

Question 12

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

Question 13

The federal government is concerned about obesity in the United States. Congress is considering two plans. One will ban the production and sale of "junk food." The other will increase nutrition­education programs and include substantial advertising campaigns to encourage healthy eating habits. The junk-food ban program

Accepted Answer

A)   and the education program will reduce the quantity of junk food sold and raise the price.
B)   and the education program will reduce the quantity of junk food sold and lower the price.
C)   will reduce the quantity of junk food sold and raise the price. The education program will reduce the quantity of junk food sold and lower the price.
D)   will reduce the quantity of junk food sold and lower the price. The education program will reduce the quantity of junk food sold and raise the price.E) A) and D)
F) B) and C)

Question 14

Consider the following pairs of goods. For which of the two goods would you expect the demand to be more price elastic? Why?
a. water or diamonds
b. insulin or nasal decongestant spray
c. food in general or breakfast cereal
d. gasoline over the course of a week or gasoline over the course of a year
e. personal computers or IBM personal computers

Accepted Answer

a. Diamonds are luxuries, and water is a...

Question 15

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

Accepted Answer

A)   white chocolate chip with macadamia nut cookies
B)   Mrs. Field's chocolate chip cookies
C)   milk chocolate chip cookies
D)   cookiesE) None of the above
F) B) and C)

Question 16

Figure 5-4 
-Refer to Figure 5-4. Assume the section of the demand curve from A to B corresponds to prices between $6 and $12. Then, when the price increases from $8 to $10,

Accepted Answer

A)   the percent decrease in the quantity demanded exceeds the percent increase in the price.
B)   the percent increase in the price exceeds the percent decrease in the quantity demanded.
C)   sellers' total revenue increases as a result.
D)   it is possible that the quantity demanded fell from 550 to 500 as a result.E) A) and C)
F) A) and D)

Question 17

Figure 5-19 
-Refer to Figure 5-19. Which of the following statements is not correct?

Accepted Answer

A)   Supply curve A is perfectly inelastic.
B)   Supply curve B is perfectly elastic.
C)   Supply curve C is unit elastic.
D)   Supply curve D is more elastic than supply curve d.E) A) and D)
F) All of the above

Question 18

A linear, upward-sloping supply curve has

Accepted Answer

A)   a constant slope and a changing price elasticity of supply.
B)   a changing slope and a constant price elasticity of supply.
C)   both a constant slope and a constant price elasticity of supply.
D)   both a changing slope and a changing price elasticity of supply.E) A) and B)
F) None of the above

Question 19

Scenario 5-3
Suppose that the supply of aged cheddar cheese is inelastic, and the supply of bread is elastic. Both goods are considered to be normal goods by a majority of consumers. Suppose that a large income tax increase decreases the demand for both goods by 10%.
-Refer to Scenario 5-3. The price elasticity of supply for aged cheddar cheese could be

Accepted Answer

A)   -1.
B)   0.
C)   0.5.
D)   1.5.E) None of the above
F) B) and D)

Question 20

Suppose the price elasticity of demand for a product is 0.5. If a supplier wants to increase revenue, what change should it make to price, if any?

Accepted Answer

The answer of Suppose the price elasticity of demand for...

Exam 5: Elasticity and Its Application

If the price of natural gas rises, when is the price elasticity of demand likely to be the highest?

Correct Answer
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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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A t-shirt maker would be willing to supply 75 t-shirts per day at a price of $18.00 each. At a price of $20.00, the t- shirt maker would be willing to supply 100 t-shirts. Using the midpoint method, the price elasticity of supply for t- shirts is about

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Holding all other forces constant, when the price of gasoline rises, the number of gallons of gasoline demanded would fall substantially over a ten-year period because

Correct Answer
verified

Which of the following could be the price elasticity of demand for a good for which an increase in price would increase revenue?

Correct Answer
verified

When quantity demanded responds strongly to changes in price, demand is said to be

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified
a. Diamonds are luxuries, and water is a...
View Answer

Suppose the price elasticity of demand for a product is 0.5. If a supplier wants to increase revenue, what change should it make to price, if any?

Correct Answer
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A linear, upward-sloping supply curve has

Correct Answer
verified

A bakery would be willing to supply 500 bagels per day at a price of $0.50 each. At a price of $0.80, the bakery would be willing to supply 1,100 bagels. Using the midpoint method, the price elasticity of supply for bagels is about

Correct Answer
verified

Correct Answer
verified

On a certain supply curve, one point is (quantity supplied = 200, price = $2.00) and another point is (quantity supplied= 250, price = $2.50) . Using the midpoint method, the price elasticity of supply is about

Correct Answer
verified

Figure 5-4 -Refer to Figure 5-4. Assume the section of the demand curve from A to B corresponds to prices between $6 and $12. Then, when the price increases from $8 to $10,

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

Figure 5-19 -Refer to Figure 5-19. Which of the following statements is not correct?

Correct Answer
verified

While in college, Marty and Laura each buy 15 bus tickets per month. After they graduate and have full-time jobs, Marty buys 0 bus tickets per month and Laura buys 28 bus tickets per month. Comparing income elasticity of demand for bus tickets, Marty's

Correct Answer
verified

Exam 5: Elasticity and Its Application

If the price of natural gas rises, when is the price elasticity of demand likely to be the highest?

Correct AnswerverifiedShow 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

A t-shirt maker would be willing to supply 75 t-shirts per day at a price of $18.00 each. At a price of $20.00, the t- shirt maker would be willing to supply 100 t-shirts. Using the midpoint method, the price elasticity of supply for t- shirts is about

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Holding all other forces constant, when the price of gasoline rises, the number of gallons of gasoline demanded would fall substantially over a ten-year period because

Correct AnswerverifiedShow Answer

Which of the following could be the price elasticity of demand for a good for which an increase in price would increase revenue?

Correct AnswerverifiedShow Answer

When quantity demanded responds strongly to changes in price, demand is said to be

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answerverifieda. Diamonds are luxuries, and water is a...View AnswerShow Answer

Suppose the price elasticity of demand for a product is 0.5. If a supplier wants to increase revenue, what change should it make to price, if any?

Correct AnswerverifiedShow Answer

A linear, upward-sloping supply curve has

Correct AnswerverifiedShow Answer

A bakery would be willing to supply 500 bagels per day at a price of $0.50 each. At a price of $0.80, the bakery would be willing to supply 1,100 bagels. Using the midpoint method, the price elasticity of supply for bagels is about

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

On a certain supply curve, one point is (quantity supplied = 200, price = $2.00) and another point is (quantity supplied= 250, price = $2.50) . Using the midpoint method, the price elasticity of supply is about

Correct AnswerverifiedShow Answer

Figure 5-4 -Refer to Figure 5-4. Assume the section of the demand curve from A to B corresponds to prices between $6 and $12. Then, when the price increases from $8 to $10,

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

Figure 5-19 -Refer to Figure 5-19. Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

While in college, Marty and Laura each buy 15 bus tickets per month. After they graduate and have full-time jobs, Marty buys 0 bus tickets per month and Laura buys 28 bus tickets per month. Comparing income elasticity of demand for bus tickets, Marty's

Correct AnswerverifiedShow Answer

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Correct Answer
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Correct Answer
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Correct Answer
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a. Diamonds are luxuries, and water is a...
View 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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Correct Answer
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Correct Answer
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