Question 1

You and your college roommate eat three packages of Ramen noodles each week. After graduation last month, both of you were hired at several times your college income. Your roommate still enjoys Ramen noodles very much and buys even more, but you plan to buy fewer Ramen noodles in favor of foods you prefer more. When looking at income elasticity of demand for Ramen noodles, yours would

Accepted Answer

A)   be negative and your roommate's would be positive.
B)   be positive and your roommate's would be negative.
C)   be zero and your roommate's would approach infinity.
D)   approach infinity and your roommate's would be zero.E) B) and C)
F) C) and D)

Question 2

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) A) and D)

Question 3

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 D)
F) A) and D)

Question 4

Suppose a market has the demand function Qd=20-0.5P. At what price will total revenue be maximized?

Accepted Answer

The answer of Suppose a market has the demand function...

Question 5

If the price elasticity of demand for a good is 1.2, then a 3 percent decrease in price results in a

Accepted Answer

A)   0.4 percent increase in the quantity demanded.
B)   2.5 percent increase in the quantity demanded.
C)   3.6 percent increase in the quantity demanded.
D)   6 percent increase in the quantity demanded.E) A) and C)
F) C) and D)

Question 6

Consider luxury weekend hotel packages in Las Vegas. When the price is $250, the quantity demanded is 2,000 packages per week. When the price is $280, the quantity demanded is 1,700 packages per week. Using the midpoint method, the price elasticity of demand is about

Accepted Answer

A)   1.43, and an increase in the price will cause hotels' total revenue to decrease.
B)   1.43, and an increase in the price will cause hotels' total revenue to increase.
C)   0.70, and an increase in the price will cause hotels' total revenue to decrease.
D)   0.70, and an increase in the price will cause hotels' total revenue to increase.E) None of the above
F) A) and D)

Question 7

Figure 5-4 
-Refer to Figure 5-4. The section of the demand curve from A to B 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) A) and C)
F) All of the above

Question 8

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

Accepted Answer

A)   change in the costs of production.
B)   tradeoff between equality and efficiency.
C)   effect on the budget deficit or surplus.
D)   direction and magnitude of the effect.E) C) and D)
F) A) and B)

Question 9

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

Question 10

For a horizontal demand curve,

Accepted Answer

A)   the slope is undefined, and the price elasticity of demand is equal to 0.
B)   the slope is equal to 0, and the price elasticity of demand is undefined.
C)   both the slope and price elasticity of demand are undefined.
D)   both the slope and price elasticity of demand are equal to 0.E) B) and D)
F) A) and C)

Question 11

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

Question 12

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

Accepted Answer

The price ...

Question 13

For which of the following goods is the price elasticity of demand most inelastic?

Accepted Answer

A)   pizza
B)   large pizza
C)   large pepperoni pizza
D)   Domino's large pepperoni pizzaE) B) and C)
F) A) and B)

Question 14

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 15

When a supply curve is relatively flat,

Accepted Answer

A)   sellers are not very responsive to changes in price.
B)   supply is relatively inelastic.
C)   supply is relatively elastic.
D)   Both a and b are correct.E) B) and C)
F) A) and C)

Question 16

Table 5-11
 
-Refer to Table 5-11. Which scenario describes the market for oil in the long run?

Accepted Answer

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

Question 17

Assume that a 4 percent decrease in income results in a 6 percent increase in the quantity demanded of a good. The income elasticity of demand for the good is

Accepted Answer

A)   negative, and the good is an inferior good.
B)   negative, and the good is a normal good.
C)   positive, and the good is an inferior good.
D)   positive, and the good is a normal good.E) All of the above
F) C) and D)

Question 18

Last year, Jim bought 8 tickets to sporting events when his income was $30,000. This year, his income is $33,000, and he purchased 10 tickets to sporting events. Holding other factors constant and using the midpoint method, it follows that Jim's income elasticity of demand is about

Accepted Answer

A)   0.43, and Jim regards tickets to sporting events as inferior goods.
B)   0.43, and Jim regards tickets to sporting events as normal goods.
C)   2.33, and Jim regards tickets to sporting events as inferior goods.
D)   2.33, and Jim regards tickets to sporting events as normal goods.E) C) and D)
F) B) and D)

Question 19

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

Accepted Answer

A)   yoga mats
B)   prescription medicine
C)   protein powder
D)   gym membershipsE) A) and B)
F) None of the above

Question 20

Which of the following could be the cross-price elasticity of demand for two goods that are complements?

Accepted Answer

A)   -1.3
B)   0
C)   0.2
D)   1.4E) A) and C)
F) B) and C)

Exam 5: Elasticity and Its Application

If the price elasticity of demand for a good is 1.2, then a 3 percent decrease in price results in a

Correct Answer
verified

Last year, Jim bought 8 tickets to sporting events when his income was $30,000. This year, his income is $33,000, and he purchased 10 tickets to sporting events. Holding other factors constant and using the midpoint method, it follows that Jim's income elasticity of demand is about

Correct Answer
verified

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

Correct Answer
verified

Which of the following could be the cross-price elasticity of demand for two goods that are complements?

Correct Answer
verified

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

Correct Answer
verified

When a supply curve is relatively flat,

Correct Answer
verified

Table 5-11 -Refer to Table 5-11. Which scenario describes the market for oil in the long run?

Correct Answer
verified

Suppose a market has the demand function Qd=20-0.5P. At what price will total revenue be maximized?

Correct Answer
verified

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

Correct Answer
verified
The price ...
View Answer

A perfectly inelastic demand implies that buyers

Correct Answer
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For a horizontal demand curve,

Correct Answer
verified

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 Answer
verified

Consider luxury weekend hotel packages in Las Vegas. When the price is $250, the quantity demanded is 2,000 packages per week. When the price is $280, the quantity demanded is 1,700 packages per week. Using the midpoint method, the price elasticity of demand is about

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

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

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Assume that a 4 percent decrease in income results in a 6 percent increase in the quantity demanded of a good. The income elasticity of demand for the good is

Correct Answer
verified

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
verified

For which of the following goods is the price elasticity of demand most inelastic?

Correct Answer
verified

Exam 5: Elasticity and Its Application

If the price elasticity of demand for a good is 1.2, then a 3 percent decrease in price results in a

Correct AnswerverifiedShow Answer

Last year, Jim bought 8 tickets to sporting events when his income was $30,000. This year, his income is $33,000, and he purchased 10 tickets to sporting events. Holding other factors constant and using the midpoint method, it follows that Jim's income elasticity of demand is about

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following could be the cross-price elasticity of demand for two goods that are complements?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When a supply curve is relatively flat,

Correct AnswerverifiedShow Answer

Table 5-11 -Refer to Table 5-11. Which scenario describes the market for oil in the long run?

Correct AnswerverifiedShow Answer

Suppose a market has the demand function Qd=20-0.5P. At what price will total revenue be maximized?

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

A perfectly inelastic demand implies that buyers

Correct AnswerverifiedShow Answer

For a horizontal demand curve,

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

Consider luxury weekend hotel packages in Las Vegas. When the price is $250, the quantity demanded is 2,000 packages per week. When the price is $280, the quantity demanded is 1,700 packages per week. Using the midpoint method, the price elasticity of demand is about

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

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Assume that a 4 percent decrease in income results in a 6 percent increase in the quantity demanded of a good. The income elasticity of demand for the good is

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

For which of the following goods is the price elasticity of demand most inelastic?

Correct AnswerverifiedShow Answer

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The price ...
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