Question 1

Figure 5-19 
-Refer to Figure 5-19. Which of the following statements is not correct?

Accepted Answer

A)   Supply curve A is perfectly inelastic.
B)   Supply curve B is perfectly elastic.
C)   Supply curve C is unit elastic.
D)   Supply curve D is more elastic than supply curve C.E) B) and C)
F) A) and B)

Question 2

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

Question 3

Which of the following expressions represents a cross-price elasticity of demand?

Accepted Answer

A)   percentage change in quantity demanded of bread divided by percentage change in quantity supplied of bread
B)   percentage change in quantity demanded of bread divided by percentage change in price of butter
C)   percentage change in price of bread divided by percentage change in quantity demanded of bread
D)   percentage change in quantity demanded of bread divided by percentage change in incomeE) A) and B)
F) None of the above

Question 4

As we move downward and to the right along a linear, downward-sloping demand curve,

Accepted Answer

A)   both slope and elasticity remain constant.
B)   slope changes but elasticity remains constant.
C)   both slope and elasticity change.
D)   slope remains constant but elasticity changes.E) B) and C)
F) A) and D)

Question 5

The price elasticity of supply measures how responsive

Accepted Answer

A)   sellers are to a change in price.
B)   sellers are to a change in buyers' income.
C)   buyers are to a change in production costs.
D)   equilibrium price is to a change in supply.E) A) and B)
F) B) and D)

Question 6

Which of the following expressions can be used to compute the price elasticity of demand?

Accepted Answer

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

Question 7

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

Accepted Answer

The price ...

Question 8

A decrease in supply will cause the largest increase in price when

Accepted Answer

A)   both supply and demand are inelastic.
B)   both supply and demand are elastic.
C)   demand is elastic and supply is inelastic.
D)   demand is inelastic and supply is elastic.E) A) and B)
F) None of the above

Question 9

Scenario 5-8
Consider the markets for mobile and landline telephone service. Suppose that when the average income of residents of Plainville is $55,000 per year, the quantity demanded of landline telephone service is 12,500 and the quantity demanded of mobile service is 28,000. Suppose that when the price of mobile service rises from $100 to $120 per month, the quantity demanded of landline service decreases to 11,000. Suppose also that when the average income increases to $60,000, the quantity demanded of mobile service increases to 33,000.
-Refer to Scenario 5-8. Considering the cross price elasticity of demand for mobile and landline telephone service, is the cross price elasticity of demand positive or negative and do the consumers of Plainville regard these goods as substitutes or complements?

Accepted Answer

The cross price elas...

Question 10

A discovery that increases wheat yields per acre helps farmers by increasing both supply and total revenues.

Accepted Answer

A) True 
 B)False

Question 11

Figure 5-5 
-Refer to Figure 5-5. Using the midpoint method, demand is unit elastic between prices of

Accepted Answer

A)   $20 and $40.
B)   $40 and$50.
C)   $40 and$60.
D)   $50 and$70.E) C) and D)
F) None of the above

Question 12

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

Accepted Answer

The goods ...

Question 13

When her income increased from $10,000 to $20,000, Heather's consumption of macaroni decreased from 10 pounds to 5 pounds and her consumption of soy-burgers increased from 2 pounds to 4 pounds. We can conclude that for Heather, macaroni

Accepted Answer

A)   and soy-burgers are both normal goods with income elasticities equal to 1.
B)   is an inferior good and soy-burgers are normal goods; both have income elasticities of 1.
C)   is an inferior good with an income elasticity of -1 and soy-burgers are normal goods with an income elasticity of 1.
D)   and soy-burgers are both inferior goods with income elasticities equal to -1.E) C) and D)
F) B) and D)

Question 14

The demand for desserts tends to be more inelastic than the demand for red velvet cake.

Accepted Answer

A) True 
 B)False

Question 15

If we observe that when consumers' incomes rise by 10%, the quantity demanded of ice cream increases by 5%,
then ice cream is an inferior good.

Accepted Answer

A) True 
 B)False

Question 16

For a particular good, a 5 percent increase in price causes a 2 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Accepted Answer

A)   There are many 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 long.E) A) and C)
F) A) and B)

Question 17

A recent news report lamented the plight of corn farmers in Wisconsin due to a severe drought. Which of the following best describes the effect on corn farmers in Minnesota, where sufficient rainfall occurred?

Accepted Answer

A)   Their revenue increases because price increases and demand is elastic.
B)   Their revenue increases because price increases and demand is inelastic.
C)   Their revenue decreases because price decreases and demand is inelastic.
D)   Their revenue decreases because price increases and demand is elastic.E) None of the above
F) A) and B)

Question 18

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

Question 19

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. You still enjoy Ramen noodles very much and buy even more, but your roommate plans to buy fewer Ramen noodles in favor of foods she prefers 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) A) and C)
F) A) and B)

Question 20

With regard to elasticity, if a firm has a longer time to adjust to a price increase, supply will be more

Accepted Answer

The answer of With regard to elasticity, if a firm...

Exam 5: Elasticity and Its Application

A recent news report lamented the plight of corn farmers in Wisconsin due to a severe drought. Which of the following best describes the effect on corn farmers in Minnesota, where sufficient rainfall occurred?

Correct Answer
verified

With regard to elasticity, if a firm has a longer time to adjust to a price increase, supply will be more

Correct Answer
verified

The demand for desserts tends to be more inelastic than the demand for red velvet cake.

Correct Answer
verified

Figure 5-5 -Refer to Figure 5-5. Using the midpoint method, demand is unit elastic between prices of

Correct Answer
verified

Which of the following expressions represents a cross-price elasticity of demand?

Correct Answer
verified

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

Correct Answer
verified
The goods ...
View Answer

Correct Answer
verified

The price elasticity of supply measures how responsive

Correct Answer
verified

Which of the following expressions can be used to compute the price elasticity of demand?

Correct Answer
verified

If we observe that when consumers' incomes rise by 10%, the quantity demanded of ice cream increases by 5%, then ice cream is an inferior good.

Correct Answer
verified

A discovery that increases wheat yields per acre helps farmers by increasing both supply and total revenues.

Correct Answer
verified

Correct Answer
verified
The cross price elas...
View Answer

When a supply curve is relatively flat,

Correct Answer
verified

A decrease in supply will cause the largest increase in price when

Correct Answer
verified

Figure 5-19 -Refer to Figure 5-19. Which of the following statements is not correct?

Correct Answer
verified

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

Correct Answer
verified
The price ...
View Answer

As we move downward and to the right along a linear, downward-sloping demand curve,

Correct Answer
verified

When her income increased from $10,000 to $20,000, Heather's consumption of macaroni decreased from 10 pounds to 5 pounds and her consumption of soy-burgers increased from 2 pounds to 4 pounds. We can conclude that for Heather, macaroni

Correct Answer
verified

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

Correct Answer
verified

For a particular good, a 5 percent increase in price causes a 2 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Correct Answer
verified

Exam 5: Elasticity and Its Application

A recent news report lamented the plight of corn farmers in Wisconsin due to a severe drought. Which of the following best describes the effect on corn farmers in Minnesota, where sufficient rainfall occurred?

Correct AnswerverifiedShow Answer

With regard to elasticity, if a firm has a longer time to adjust to a price increase, supply will be more

Correct AnswerverifiedShow Answer

The demand for desserts tends to be more inelastic than the demand for red velvet cake.

Correct AnswerverifiedShow Answer

Figure 5-5 -Refer to Figure 5-5. Using the midpoint method, demand is unit elastic between prices of

Correct AnswerverifiedShow Answer

Which of the following expressions represents a cross-price elasticity of demand?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedThe goods ...View AnswerShow Answer

Correct AnswerverifiedShow Answer

The price elasticity of supply measures how responsive

Correct AnswerverifiedShow Answer

Which of the following expressions can be used to compute the price elasticity of demand?

Correct AnswerverifiedShow Answer

If we observe that when consumers' incomes rise by 10%, the quantity demanded of ice cream increases by 5%, then ice cream is an inferior good.

Correct AnswerverifiedShow Answer

A discovery that increases wheat yields per acre helps farmers by increasing both supply and total revenues.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe cross price elas...View AnswerShow Answer

When a supply curve is relatively flat,

Correct AnswerverifiedShow Answer

A decrease in supply will cause the largest increase in price when

Correct AnswerverifiedShow Answer

Figure 5-19 -Refer to Figure 5-19. Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedThe price ...View AnswerShow Answer

As we move downward and to the right along a linear, downward-sloping demand curve,

Correct AnswerverifiedShow Answer

When her income increased from $10,000 to $20,000, Heather's consumption of macaroni decreased from 10 pounds to 5 pounds and her consumption of soy-burgers increased from 2 pounds to 4 pounds. We can conclude that for Heather, macaroni

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

For a particular good, a 5 percent increase in price causes a 2 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Correct AnswerverifiedShow Answer

Correct Answer
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The goods ...
View Answer

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Correct Answer
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Correct Answer
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Correct Answer
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The cross price elas...
View Answer

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Correct Answer
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Correct Answer
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Correct Answer
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The price ...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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