Question 1

Table 5-12 
-Refer to Table 5-12. Using the midpoint method, what is the price elasticity of demand between $2 and $4?

Accepted Answer

The price ...

Question 2

Suppose that good X has few close substitutes and that good Y has many close substitutes. Which good would you expect to have more price elastic demand?

Accepted Answer

The answer of Suppose that good X has few close...

Question 3

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

Accepted Answer

A)  0.6
B)  0.9
C)  1
D)  2.6E) B) and D)
F) B) and C)

Question 4

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) All of the above
F) A) and B)

Question 5

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 C)
F) C) and D)

Question 6

Suppose the price elasticity of demand for good A is 1.25. If the price of good A increases by 20%, what will be the resulting percentage change in quantity demanded for good A?

Accepted Answer

Quantity d...

Question 7

Figure 5-14 
-Refer to Figure 5-14. Over which range is the supply curve in this figure the most elastic?

Accepted Answer

A)  $16 to $40
B)  $40 to $100
C)  $100 to $220
D)  $220 to $430E) A) and B)
F) A) and C)

Question 8

Scenario 5-4
Milk has an inelastic demand, and beef has an elastic demand. Suppose that a mysterious increase in bovine infertility decreases both the population of dairy cows and the population of beef cattle by 50 percent.
-Refer to Scenario 5-4. The equilibrium price will

Accepted Answer

A)  increase in both the milk and beef markets.
B)  increase in the milk market and decrease in the beef market.
C)  decrease in the milk market and increase in the beef market.
D)  decrease in both the milk and beef markets.E) C) and D)
F) All of the above

Question 9

Assume that a 4 percent increase in income results in a 2 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 a normal good.
D)  positive, and the good is an inferior good.E) C) and D)
F) None of the above

Question 10

Suppose that when the price of ginger ale is $2 per bottle, firms can sell 4 million bottles. When the price of ginger ale is $3 per bottle, firms can sell 2 million bottles. Which of the following statements is true?

Accepted Answer

A)  The demand for ginger ale is income inelastic, so an increase in the price of ginger ale will increase the total revenue of ginger ale producers.
B)  The demand for ginger ale is income elastic, so an increase in the price of ginger ale will increase the total revenue of ginger ale producers.
C)  The demand for ginger ale is price inelastic, so an increase in the price of ginger ale will increase the total revenue of ginger ale producers.
D)  The demand for ginger ale is price elastic, so an increase in the price of ginger ale will decrease the total revenue of ginger ale producers.E) None of the above
F) A) and B)

Question 11

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

Question 12

Figure 5-20 
-Refer to Figure 5-20. Which supply curve is most likely relevant over a very long period of time?

Accepted Answer

A)  S1
B)  S2
C)  S3
D)  All of the above are equally likely to be relevant over a very long period of time.E) B) and C)
F) A) and D)

Question 13

The supply of oil is likely to be

Accepted Answer

A)  inelastic in both the short run and long run.
B)  elastic in both the short run and long run.
C)  elastic in the short run and inelastic in the long run.
D)  inelastic in the short run and elastic in the long run.E) A) and D)
F) A) and B)

Question 14

If an increase in income results in a decrease in the quantity demanded of a good, then for that good, the

Accepted Answer

A)  cross-price elasticity of demand is negative.
B)  price elasticity of demand is elastic.
C)  income elasticity of demand is negative.
D)  income elasticity of demand is positive.E) All of the above
F) A) and D)

Question 15

For a particular good, a 2 percent increase in price causes a 12 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Accepted Answer

A)  There are no 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 short.E) None of the above
F) B) and C)

Question 16

Scenario 5-3
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. Total consumer spending on aged cheddar cheese will

Accepted Answer

A)  increase, and total consumer spending on bread will increase.
B)  increase, and total consumer spending on bread will decrease.
C)  decrease, and total consumer spending on bread will increase.
D)  decrease, and total consumer spending on bread will decrease.E) None of the above
F) B) and D)

Question 17

Scenario 5-3
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 equilibrium price will

Accepted Answer

A)  increase in both the aged cheddar cheese and bread markets.
B)  increase in the aged cheddar cheese market and decrease in the bread market.
C)  decrease in the aged cheddar cheese market and increase in the bread market.
D)  decrease in both the aged cheddar cheese and bread markets.E) B) and C)
F) C) and D)

Question 18

When a university bookstore prices chemistry textbooks at $200 each, it generally sells 120 books per month. If it lowers the price to $160, sales increase to 160 books per month. Given this information, we know that the price elasticity of demand for chemistry books is about

Accepted Answer

A)  1.29, and a decrease in price from $200 to $160 results in an increase in total revenue.
B)  1.29, and a decrease in price from $200 to $160 results in a decrease in total revenue.
C)  0.78, and a decrease in price from $200 to $160 results in an increase in total revenue.
D)  0.78, and a decrease in price from $200 to $160 results in a decrease in total revenue.E) A) and B)
F) A) and D)

Question 19

Demand is inelastic if the price elasticity of demand is greater than 1.

Accepted Answer

A) True 
 B)False

Question 20

In general, elasticity is a measure of

Accepted Answer

A)  the extent to which advances in technology are adopted by producers.
B)  the extent to which a market is competitive.
C)  how firms' profits respond to changes in market prices.
D)  how much buyers and sellers respond to changes in market conditions.E) A) and C)
F) B) and C)

Exam 5: Elasticity and Its Application

For a particular good, a 2 percent increase in price causes a 12 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Correct Answer
verified

Scenario 5-4 Milk has an inelastic demand, and beef has an elastic demand. Suppose that a mysterious increase in bovine infertility decreases both the population of dairy cows and the population of beef cattle by 50 percent. -Refer to Scenario 5-4. The equilibrium price will

Correct Answer
verified

When a university bookstore prices chemistry textbooks at $200 each, it generally sells 120 books per month. If it lowers the price to $160, sales increase to 160 books per month. Given this information, we know that the price elasticity of demand for chemistry books is about

Correct Answer
verified

In general, elasticity is a measure of

Correct Answer
verified

Assume that a 4 percent increase in income results in a 2 percent increase in the quantity demanded of a good. The income elasticity of demand for the good is

Correct Answer
verified

Correct Answer
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Table 5-12 -Refer to Table 5-12. Using the midpoint method, what is the price elasticity of demand between $2 and $4?

Correct Answer
verified
The price ...
View Answer

If an increase in income results in a decrease in the quantity demanded of a good, then for that good, the

Correct Answer
verified

Figure 5-20 -Refer to Figure 5-20. Which supply curve is most likely relevant over a very long period of time?

Correct Answer
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Suppose the price elasticity of demand for good A is 1.25. If the price of good A increases by 20%, what will be the resulting percentage change in quantity demanded for good A?

Correct Answer
verified
Quantity d...
View Answer

For a horizontal demand curve,

Correct Answer
verified

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

Correct Answer
verified

Demand is inelastic if the price elasticity of demand is greater than 1.

Correct Answer
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Figure 5-14 -Refer to Figure 5-14. Over which range is the supply curve in this figure the most elastic?

Correct Answer
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Suppose that good X has few close substitutes and that good Y has many close substitutes. Which good would you expect to have more price elastic demand?

Correct Answer
verified

Correct Answer
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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 inelastic demand?

Correct Answer
verified

The supply of oil is likely to be

Correct Answer
verified

Suppose that when the price of ginger ale is $2 per bottle, firms can sell 4 million bottles. When the price of ginger ale is $3 per bottle, firms can sell 2 million bottles. Which of the following statements is true?

Correct Answer
verified

Exam 5: Elasticity and Its Application

For a particular good, a 2 percent increase in price causes a 12 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Correct AnswerverifiedShow Answer

Scenario 5-4 Milk has an inelastic demand, and beef has an elastic demand. Suppose that a mysterious increase in bovine infertility decreases both the population of dairy cows and the population of beef cattle by 50 percent. -Refer to Scenario 5-4. The equilibrium price will

Correct AnswerverifiedShow Answer

When a university bookstore prices chemistry textbooks at $200 each, it generally sells 120 books per month. If it lowers the price to $160, sales increase to 160 books per month. Given this information, we know that the price elasticity of demand for chemistry books is about

Correct AnswerverifiedShow Answer

In general, elasticity is a measure of

Correct AnswerverifiedShow Answer

Assume that a 4 percent increase in income results in a 2 percent increase in the quantity demanded of a good. The income elasticity of demand for the good is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 5-12 -Refer to Table 5-12. Using the midpoint method, what is the price elasticity of demand between $2 and $4?

Correct AnswerverifiedThe price ...View AnswerShow Answer

If an increase in income results in a decrease in the quantity demanded of a good, then for that good, the

Correct AnswerverifiedShow Answer

Figure 5-20 -Refer to Figure 5-20. Which supply curve is most likely relevant over a very long period of time?

Correct AnswerverifiedShow Answer

Suppose the price elasticity of demand for good A is 1.25. If the price of good A increases by 20%, what will be the resulting percentage change in quantity demanded for good A?

Correct AnswerverifiedQuantity d...View AnswerShow Answer

For a horizontal demand curve,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Demand is inelastic if the price elasticity of demand is greater than 1.

Correct AnswerverifiedShow Answer

Figure 5-14 -Refer to Figure 5-14. Over which range is the supply curve in this figure the most elastic?

Correct AnswerverifiedShow Answer

Suppose that good X has few close substitutes and that good Y has many close substitutes. Which good would you expect to have more price elastic demand?

Correct AnswerverifiedShow Answer

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 inelastic demand?

Correct AnswerverifiedShow Answer

The supply of oil is likely to be

Correct AnswerverifiedShow Answer

Suppose that when the price of ginger ale is $2 per bottle, firms can sell 4 million bottles. When the price of ginger ale is $3 per bottle, firms can sell 2 million bottles. Which of the following statements is true?

Correct AnswerverifiedShow Answer

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The price ...
View Answer

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Quantity d...
View Answer

Correct Answer
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