Question 1

Suppose the price of gas increases by 20%. Will demand be more elastic if consumers have 3 weeks or 3 years to adjust to this price change?

Accepted Answer

The answer of Suppose the price of gas increases by...

Question 2

Suppose that 50 hot dogs are demanded at a particular price. If the price of hot dogs rises from that price by 5 percent, the number of hot dogs demanded falls to 48. Using the midpoint approach to calculate the price elasticity of demand, it follows that the

Accepted Answer

A)   demand for hot dogs in this price range is unit elastic.
B)   price increase will decrease the total revenue of hot dog sellers.
C)   price elasticity of demand for hot dogs in this price range is about 1.22.
D)   price elasticity of demand for hot dogs in this price range is about 0.82.E) None of the above
F) B) and C)

Question 3

As the price elasticity of supply approaches infinity, very small changes in price lead to

Accepted Answer

A)   very large changes in quantity supplied.
B)   very small changes in quantity supplied.
C)   no change in quantity supplied.
D)   None of the above is correct.E) A) and D)
F) None of the above

Question 4

When demand is unit elastic, price elasticity of demand equals

Accepted Answer

A)   1, and total revenue and price move in the same direction.
B)   1, and total revenue and price move in opposite directions.
C)   1, and total revenue does not change when price changes.
D)   0, and total revenue does not change when price changes.E) C) and D)
F) A) and B)

Question 5

A person who takes a prescription drug to control high cholesterol most likely has a demand for that drug that is

Accepted Answer

A)   inelastic.
B)   unit elastic.
C)   elastic.
D)   highly responsive to changes in income.E) A) and D)
F) B) and C)

Question 6

If the price elasticity of demand for a good is 0.4, then which of the following events is consistent with a 2 percent decrease in the quantity of the good demanded?

Accepted Answer

A)   a 0.8 percent increase in the price of the good
B)   a 2.4 percent increase in the price of the good
C)   a 5 percent increase in the price of the good
D)   a 8 percent increase in the price of the goodE) A) and B)
F) A) and D)

Question 7

If the price elasticity of demand for a good is 4, then a 12 percent decrease in price results in a

Accepted Answer

A)   0.33 percent increase in the quantity demanded.
B)   3 percent increase in the quantity demanded.
C)   30 percent increase in the quantity demanded.
D)   48 percent increase in the quantity demanded.E) A) and C)
F) B) and D)

Question 8

Danita rescues dogs from her local animal shelter. When Danita's income rises by 7 percent, her quantity demanded of dog biscuits increases by 12 percent. For Danita, the income elasticity of demand for dog biscuits is

Accepted Answer

A)   negative, and dog biscuits are a normal good.
B)   negative, and dog biscuits are an inferior good.
C)   positive, and dog biscuits are an inferior good.
D)   positive, and dog biscuits are a normal good.E) C) and D)
F) B) and C)

Question 9

If the cross-price elasticity of demand for two goods is 1.25, then

Accepted Answer

A)   the two goods are luxuries.
B)   the two goods are substitutes.
C)   one of the goods is normal and the other good is inferior.
D)   the demand for one of the goods conforms to the law of demand, but the demand for the other good violates the law of demand.E) All of the above
F) None of the above

Question 10

Which of the following statements is not correct concerning government attempts to reduce the flow of illegal drugs into the country? Drug interdiction

Accepted Answer

A)   raises prices and total revenue in the drug market.
B)   can increase drug-related crime.
C)   shifts the demand curve for drugs to the left.
D)   shifts the supply curve of drugs to the left.E) A) and C)
F) None of the above

Question 11

Figure 5-9 
-Refer to Figure 5-9. Using the midpoint method, the price elasticity of demand between point C and point D is about

Accepted Answer

A)   0.29.
B)   0.54.
C)   1.86.
D)   2.0.E) A) and B)
F) A) and C)

Question 12

Suppose the price of a bag of tortilla chips decreases from $3.00 to $2.50 and, as a result, the quantity of tortilla chips demanded increases from 200 bags to 300 bags. Using the midpoint method, the price elasticity of demand for tortilla chips in the given price range is

Accepted Answer

A)   0.33.
B)   0.45.
C)   2.20.
D)   3.00.E) A) and B)
F) A) and C)

Question 13

When demand is inelastic, a decrease in price will cause

Accepted Answer

A)   an increase in total revenue.
B)   a decrease in total revenue.
C)   no change in total revenue but an increase in quantity demanded.
D)   no change in total revenue but a decrease in quantity demanded.E) C) and D)
F) A) and C)

Question 14

-Refer to Table 5-12. Between which two quantities listed is demand unit elastic?

Accepted Answer

The answer of 
-Refer to Table 5-12. Between which two...

Question 15

At a price of $1.00, a local coffee shop is willing to supply 100 cinnamon rolls per day. At a price of $1.20, the coffee shop would be willing to supply 150 cinnamon rolls per day. Using the midpoint method, the price elasticity of supply is about

Accepted Answer

A)   0.45
B)   0.90
C)   1.11
D)   2.20E) None of the above
F) C) and D)

Question 16

Demand is said to be unit elastic if quantity demanded

Accepted Answer

A)   changes by the same percent as the price.
B)   changes by a larger percent than the price.
C)   changes by a smaller percent than the price.
D)   does not respond to a change in price.E) A) and B)
F) All of the above

Question 17

If the quantity supplied is the same regardless of price, then supply is

Accepted Answer

A)   elastic.
B)   perfectly elastic.
C)   perfectly inelastic.
D)   inelastic.E) None of the above
F) All of the above

Question 18

If the quantity supplied is exactly the same regardless of the price, supply is

Accepted Answer

perfectly ...

Question 19

Hilda's Hair Hysteria earned $3,750 in total revenue last month when it sold 125 haircuts. This month it earned $3,600 in total revenue when it sold 90 haircuts. The price elasticity of demand for Hilda's Hair Hysteria is

Accepted Answer

A)   0.33.
B)   0.88.
C)   1.14.
D)   7.98.E) A) and D)
F) C) and D)

Question 20

Which of the following should be held constant when calculating an income elasticity of demand?

Accepted Answer

A)   the price of the good
B)   prices of related goods
C)   tastes
D)   All of the above should be held constant.E) All of the above
F) A) and B)

Exam 5: Elasticity and Its Application

If the quantity supplied is exactly the same regardless of the price, supply is

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When demand is inelastic, a decrease in price will cause

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Suppose the price of a bag of tortilla chips decreases from $3.00 to $2.50 and, as a result, the quantity of tortilla chips demanded increases from 200 bags to 300 bags. Using the midpoint method, the price elasticity of demand for tortilla chips in the given price range is

Correct AnswerverifiedShow Answer

Danita rescues dogs from her local animal shelter. When Danita's income rises by 7 percent, her quantity demanded of dog biscuits increases by 12 percent. For Danita, the income elasticity of demand for dog biscuits is

Correct AnswerverifiedShow Answer

If the price elasticity of demand for a good is 0.4, then which of the following events is consistent with a 2 percent decrease in the quantity of the good demanded?

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When demand is unit elastic, price elasticity of demand equals

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Suppose that 50 hot dogs are demanded at a particular price. If the price of hot dogs rises from that price by 5 percent, the number of hot dogs demanded falls to 48. Using the midpoint approach to calculate the price elasticity of demand, it follows that the

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Which of the following should be held constant when calculating an income elasticity of demand?

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If the cross-price elasticity of demand for two goods is 1.25, then

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As the price elasticity of supply approaches infinity, very small changes in price lead to

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Which of the following statements is not correct concerning government attempts to reduce the flow of illegal drugs into the country? Drug interdiction

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Hilda's Hair Hysteria earned $3,750 in total revenue last month when it sold 125 haircuts. This month it earned $3,600 in total revenue when it sold 90 haircuts. The price elasticity of demand for Hilda's Hair Hysteria is

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Suppose the price of gas increases by 20%. Will demand be more elastic if consumers have 3 weeks or 3 years to adjust to this price change?

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Demand is said to be unit elastic if quantity demanded

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If the price elasticity of demand for a good is 4, then a 12 percent decrease in price results in a

Correct AnswerverifiedShow Answer

If the quantity supplied is the same regardless of price, then supply is

Correct AnswerverifiedShow Answer

At a price of $1.00, a local coffee shop is willing to supply 100 cinnamon rolls per day. At a price of $1.20, the coffee shop would be willing to supply 150 cinnamon rolls per day. Using the midpoint method, the price elasticity of supply is about

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-Refer to Table 5-12. Between which two quantities listed is demand unit elastic?

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Figure 5-9 -Refer to Figure 5-9. Using the midpoint method, the price elasticity of demand between point C and point D is about

Correct AnswerverifiedShow Answer

A person who takes a prescription drug to control high cholesterol most likely has a demand for that drug that is

Correct AnswerverifiedShow Answer

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