Question 1

If marijuana were legalized, it is likely that there would be an increase in the demand for marijuana. If demand for marijuana is inelastic and the supply of marijuana is perfectly elastic, this will result in

Accepted Answer

A)   higher prices and higher total revenue from marijuana sales.
B)   higher prices but lower total revenue from marijuana sales.
C)   the same price and higher total revenue from marijuana sales.
D)   the same price but lower total revenue from marijuana sales.E) B) and C)
F) C) and D)

Question 2

If the cross-price elasticity of demand between two goods is negative, what is the relationship between the two goods?

Accepted Answer

The goods ...

Question 3

Suppose that 50 ice cream cones are demanded at a particular price. If the price of ice cream cones rises from that price by 4 percent, the number of ice cream cones demanded falls to 46. Using the midpoint approach to calculate the price elasticity of demand, it follows that the

Accepted Answer

A)   demand for ice cream cones in this price range is elastic.
B)   demand for ice cream cones in this price range is inelastic.
C)   demand for ice cream cones in this price range is unit elastic.
D)   price elasticity of demand for ice cream cones in this price range is 0.E) A) and B)
F) A) and C)

Question 4

Suppose that quantity demand rises by 10% as a result of a 15% decrease in price. The price elasticity of demand for this good is

Accepted Answer

A)   inelastic and equal to 0.67.
B)   elastic and equal to 0.67.
C)   inelastic and equal to 1.50.
D)   elastic and equal to 1.50.E) B) and C)
F) B) and D)

Question 5

Figure 5-15 
-Refer to Figure 5-15. Along which of these segments of the supply curve is supply most elastic?

Accepted Answer

A)   AB
B)   CD
C)   DH
D)   GHE) A) and C)
F) A) and B)

Question 6

Table 5-7
The following table shows a portion of the demand schedule for a particular good at various levels of income.
 
-Refer to Table 5-7. Using the midpoint method, when income equals $7,500, what is the price elasticity of demand between $16 and $20?

Accepted Answer

A)   0.56
B)   0.75
C)   1.33
D)   1.80E) None of the above
F) A) and B)

Question 7

If the cross-price elasticity of demand for two goods is -4.5, then

Accepted Answer

A)   the two goods are substitutes.
B)   the two goods are complements.
C)   one of the goods is normal while the other good is inferior.
D)   one of the goods is a luxury while the other good is a necessity.E) A) and B)
F) A) and C)

Question 8

For which of the following goods is the income elasticity of demand likely lowest?

Accepted Answer

A)   subscriptions to premium movie channels through the local cable television provider
B)   hi-definition DVD players
C)   champagne
D)   housingE) A) and C)
F) None of the above

Question 9

Which of the following expressions is valid for the price elasticity of demand?

Accepted Answer

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

Question 10

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

Question 11

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

Accepted Answer

A)   tablet computers
B)   leather boots
C)   lightbulbs
D)   optional textbooksE) C) and D)
F) All of the above

Question 12

If a 30 percent change in price causes a 15 percent change in quantity supplied, then the price elasticity of supply is about

Accepted Answer

A)   0.5, and supply is elastic.
B)   0.5, and supply is inelastic.
C)   2, and supply is inelastic.
D)   2, and supply is elastic.E) A) and B)
F) All of the above

Question 13

Frequently, in the short run, the quantity supplied of a good is

Accepted Answer

A)   impossible, or nearly impossible, to measure.
B)   not very responsive to price changes.
C)   determined by the quantity demanded of the good.
D)   determined by psychological forces and other non-economic forces.E) All of the above
F) None of the above

Question 14

If a supply curve is perfectly vertical, what is the value of the price elasticity of supply?

Accepted Answer

The answer of If a supply curve is perfectly vertical,...

Question 15

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

Question 16

Figure 5-12 
-Refer to Figure 5-12. Which of the following price changes would result in no change in sellers' total revenue?

Accepted Answer

A)   The price increases from $15 to $21.
B)   The price increases from $18 to $21.
C)   The price decreases from $24 to $18.
D)   The price decreases from $27 to $24.E) B) and D)
F) C) and D)

Question 17

Figure 5-15 
-Refer to Figure 5-15. Using the midpoint method, what is the price elasticity of supply between points A and B?

Accepted Answer

A)   2.33
B)   1.0
C)   0.43
D)   0.1E) All of the above
F) A) and B)

Question 18

At price of $1.30 per pound, a local apple orchard is willing to supply 150 pounds of apples per day. At a price of $1.50 per pound, the orchard is willing to supply 170 pounds of apples per day. Using the midpoint method, the price elasticity of supply is about

Accepted Answer

A)   1.14.
B)   1.00.
C)   0.875.
D)   0.50.E) A) and B)
F) All of the above

Question 19

If sellers do not adjust their quantities supplied at all in response to a change in price,

Accepted Answer

A)   advances in technology must be prevalent.
B)   the time period under consideration must be very long.
C)   supply is perfectly elastic.
D)   supply is perfectly inelastic.E) None of the above
F) A) and B)

Question 20

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

Accepted Answer

A)   clothing
B)   blue jeans
C)   Tommy Hilfiger jeans
D)   All three would have the same elasticity of demand because they are all related.E) A) and C)
F) B) and C)

Exam 5: Elasticity and Its Application

Suppose that 50 ice cream cones are demanded at a particular price. If the price of ice cream cones rises from that price by 4 percent, the number of ice cream cones demanded falls to 46. Using the midpoint approach to calculate the price elasticity of demand, it follows that the

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

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Figure 5-15 -Refer to Figure 5-15. Using the midpoint method, what is the price elasticity of supply between points A and B?

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For which of the following goods is the income elasticity of demand likely lowest?

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If marijuana were legalized, it is likely that there would be an increase in the demand for marijuana. If demand for marijuana is inelastic and the supply of marijuana is perfectly elastic, this will result in

Correct AnswerverifiedShow Answer

Figure 5-15 -Refer to Figure 5-15. Along which of these segments of the supply curve is supply most elastic?

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

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Suppose that quantity demand rises by 10% as a result of a 15% decrease in price. The price elasticity of demand for this good is

Correct AnswerverifiedShow Answer

If sellers do not adjust their quantities supplied at all in response to a change in price,

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Table 5-7 The following table shows a portion of the demand schedule for a particular good at various levels of income. -Refer to Table 5-7. Using the midpoint method, when income equals $7,500, what is the price elasticity of demand between $16 and $20?

Correct AnswerverifiedShow Answer

Which of the following expressions is valid for the price elasticity of demand?

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Figure 5-12 -Refer to Figure 5-12. Which of the following price changes would result in no change in sellers' total revenue?

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If a supply curve is perfectly vertical, what is the value of the price elasticity of supply?

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Frequently, in the short run, the quantity supplied of a good is

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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

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

Correct AnswerverifiedShow Answer

If the cross-price elasticity of demand between two goods is negative, what is the relationship between the two goods?

Correct AnswerverifiedThe goods ...View AnswerShow Answer

If a 30 percent change in price causes a 15 percent change in quantity supplied, then the price elasticity of supply is about

Correct AnswerverifiedShow Answer

At price of $1.30 per pound, a local apple orchard is willing to supply 150 pounds of apples per day. At a price of $1.50 per pound, the orchard is willing to supply 170 pounds of apples per day. Using the midpoint method, the price elasticity of supply is about

Correct AnswerverifiedShow Answer

If the cross-price elasticity of demand for two goods is -4.5, then

Correct AnswerverifiedShow Answer

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The goods ...
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