Question 1

Which of the following statements is correct?

Accepted Answer

A)   The demand for natural gas is more elastic over a short period of time than over a long period of time.
B)   The demand for smoke alarms is more elastic than the demand for Persian rugs.
C)   The demand for bourbon whiskey is more elastic than the demand for alcoholic beverages in general.
D)   All of the above are correct.E) A) and B)
F) A) and D)

Question 2

Even the demand for a necessity such as gasoline will respond to a change in price, especially over a longer time horizon.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A)   -3.5
B)   0.29
C)   -0.29
D)   3.5E) None of the above
F) A) and B)

Question 4

Which of the following statements is correct?

Accepted Answer

A)   The demand for flat-screen computer monitors is more elastic than the demand for monitors in general.
B)   The demand for grandfather clocks is more elastic than the demand for clocks in general.
C)   The demand for cardboard is more elastic over a long period of time than over a short period of time.
D)   All of the above are correct.E) B) and C)
F) None of the above

Question 5

Suppose goods A and B are substitutes for each other. We would expect the cross-price elasticity between these two goods to be

Accepted Answer

A)   positive.
B)   negative.
C)   either positive or negative. It depends whether A and B are normal goods or inferior goods.
D)   either positive or negative. It depends whether the current price level is on the elastic or inelastic portion of the demand curve.E) A) and C)
F) A) and B)

Question 6

If the cross-price elasticity of demand for two goods is negative, then the two goods are complements.

Accepted Answer

A) True 
 B)False

Question 7

Drug interdiction, which reduces the supply of drugs, may decrease drug-related crime because the demand for drugs is inelastic.

Accepted Answer

A) True 
 B)False

Question 8

Suppose that good X is a luxury and that good Y is a necessity. Which good would you expect to have more price inelastic demand?

Accepted Answer

The answer of Suppose that good X is a luxury...

Question 9

In January the price of widgets was $1.00, and Wendy's Widgets produced 80 widgets. In February the price of widgets was $1.50, and Wendy's Widgets produced 110 widgets. In March the price of widgets was $2.00, and Wendy's Widgets produced 140 widgets. The price elasticity of supply of Wendy's Widgets was about

Accepted Answer

A)   0.79 when the price increased from $1.00 to $1.50 and 0.84 when the price increased from $1.50 to $2.00.
B)   1.27 when the price increased from $1.00 to $1.50 and 1.19 when the price increased from $1.50 to $2.00.
C)   0.79 when the price increased from $1.00 to $1.50 and 1.19 when the price increased from $1.50 to $2.00.
D)   1.27 when the price increased from $1.00 to $1.50 and 0.84 when the price increased from $1.50 to $2.00.E) C) and D)
F) B) and D)

Question 10

Cross-price elasticity is used to determine whether goods are substitutes or complements.

Accepted Answer

A) True 
 B)False

Question 11

Suppose the price of natural gas, a typical fuel for heating homes, rises in January in Alaska. Would you expect the price elasticity of demand for natural gas to more inelastic immediately after the price increase or at some point in the future?

Accepted Answer

The price elasticity...

Question 12

Why was OPEC unable to maintain high oil prices in the long run?

Accepted Answer

A)   Demand and supply are both elastic in the long run compared to the short run.
B)   Demand and supply are both inelastic in the long run compared to the short run.
C)   Demand is elastic and supply is inelastic in the long run compared to the short run.
D)   Demand is inelastic and supply is elastic in the long run compared to the short run.E) C) and D)
F) B) and D)

Question 13

The demand for Rice Krispies is more elastic than the demand for cereal in general.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A)   chocolate
B)   Godiva chocolate
C)   Hershey's chocolate
D)   All three would have the same elasticity of demand because they are all related.E) None of the above
F) A) and B)

Question 15

Heath's income elasticity of demand for concerts is 2. All else equal, this means that if his income increases by 10 percent, he will purchase tickets for

Accepted Answer

A)   2 percent more concerts.
B)   5 percent more concerts.
C)   10 percent more concerts.
D)   20 percent more concerts.E) C) and D)
F) All of the above

Question 16

The case of perfectly elastic demand is illustrated by a demand curve that is

Accepted Answer

A)   vertical.
B)   horizontal.
C)   downward-sloping but relatively steep.
D)   downward-sloping but relatively flat.E) C) and D)
F) B) and C)

Question 17

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

Question 18

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

Accepted Answer

Total revenue will be maximize...

Question 19

Suppose that when the price of good X falls from $6 to $4, the quantity demanded of good Y rises from 30 units to 40 units. Using the midpoint method, the cross-price elasticity of demand is

Accepted Answer

A)   -0.71, and X and Y are complements.
B)   -1.40, and X and Y are complements.
C)   -0.71, and X and Y are substitutes.
D)   -1.40, and X and Y are substitutes.E) All of the above
F) None of the above

Question 20

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

Exam 5: Elasticity and Its Application

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

The demand for Rice Krispies is more elastic than the demand for cereal in general.

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

The case of perfectly elastic demand is illustrated by a demand curve that is

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

Even the demand for a necessity such as gasoline will respond to a change in price, especially over a longer time horizon.

Correct Answer
verified

Suppose that good X is a luxury and that good Y is a necessity. Which good would you expect to have more price inelastic demand?

Correct Answer
verified

Suppose goods A and B are substitutes for each other. We would expect the cross-price elasticity between these two goods to be

Correct Answer
verified

If the cross-price elasticity of demand for two goods is negative, then the two goods are complements.

Correct Answer
verified

Drug interdiction, which reduces the supply of drugs, may decrease drug-related crime because the demand for drugs is inelastic.

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

Suppose that when the price of good X falls from $6 to $4, the quantity demanded of good Y rises from 30 units to 40 units. Using the midpoint method, the cross-price elasticity of demand is

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

Heath's income elasticity of demand for concerts is 2. All else equal, this means that if his income increases by 10 percent, he will purchase tickets for

Correct Answer
verified

Suppose the price of natural gas, a typical fuel for heating homes, rises in January in Alaska. Would you expect the price elasticity of demand for natural gas to more inelastic immediately after the price increase or at some point in the future?

Correct Answer
verified
The price elasticity...
View Answer

Cross-price elasticity is used to determine whether goods are substitutes or complements.

Correct Answer
verified

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

Correct Answer
verified

Why was OPEC unable to maintain high oil prices in the long run?

Correct Answer
verified

Exam 5: Elasticity and Its Application

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

The demand for Rice Krispies is more elastic than the demand for cereal in general.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The case of perfectly elastic demand is illustrated by a demand curve that is

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

Even the demand for a necessity such as gasoline will respond to a change in price, especially over a longer time horizon.

Correct AnswerverifiedShow Answer

Suppose that good X is a luxury and that good Y is a necessity. Which good would you expect to have more price inelastic demand?

Correct AnswerverifiedShow Answer

Suppose goods A and B are substitutes for each other. We would expect the cross-price elasticity between these two goods to be

Correct AnswerverifiedShow Answer

If the cross-price elasticity of demand for two goods is negative, then the two goods are complements.

Correct AnswerverifiedShow Answer

Drug interdiction, which reduces the supply of drugs, may decrease drug-related crime because the demand for drugs is inelastic.

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

Suppose that when the price of good X falls from $6 to $4, the quantity demanded of good Y rises from 30 units to 40 units. Using the midpoint method, the cross-price elasticity of demand is

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Heath's income elasticity of demand for concerts is 2. All else equal, this means that if his income increases by 10 percent, he will purchase tickets for

Correct AnswerverifiedShow Answer

Suppose the price of natural gas, a typical fuel for heating homes, rises in January in Alaska. Would you expect the price elasticity of demand for natural gas to more inelastic immediately after the price increase or at some point in the future?

Correct AnswerverifiedThe price elasticity...View AnswerShow Answer

Cross-price elasticity is used to determine whether goods are substitutes or complements.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Why was OPEC unable to maintain high oil prices in the long run?

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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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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Total revenue will be maximize...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
The price elasticity...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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