Question 1

Suppose that two supply curves pass through the same point.One is steep,and the other is flat.Which of the following statements is correct?

Accepted Answer

A)   The flatter supply curve represents a supply that is inelastic relative to the supply represented by the steeper supply curve.
B)   The steeper supply curve represents a supply that is inelastic relative to the supply represented by the flatter supply curve.
C)   Given two prices with which to calculate the price elasticity of supply,that elasticity would be the same for both curves.
D)   A decrease in demand will increase total revenue if the steeper supply curve is relevant,while a decrease in demand will decrease total revenue if the flatter supply cure is relevant.E) All of the above
F) A) and D)

Question 2

Figure 5-13 
-Refer to Figure 5-13.Over which range is the supply curve in this figure the least elastic?

Accepted Answer

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

Question 3

Figure 5-1 
-Refer to Figure 5-1.Between point A and point B,the slope is equal to

Accepted Answer

A)   -1/4,and the price elasticity of demand is equal to 2/3.
B)   -1/4,and the price elasticity of demand is equal to 3/2.
C)   -3/2,and the price elasticity of demand is equal to 1/4.
D)   -2/3,and the price elasticity of demand is equal to 3/2.E) A) and D)
F) A) and C)

Question 4

Scenario 5-2
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 5-2.The change in equilibrium quantity will be

Accepted Answer

A)   greater in the aged cheddar cheese market than in the bread market.
B)   greater in the bread market than in the aged cheddar cheese market.
C)   the same in the aged cheddar cheese and bread markets.
D)   Any of the above could be correct.E) A) and B)
F) B) and C)

Question 5

In the long run,the quantity supplied of most goods

Accepted Answer

A)   will increase in almost all cases,regardless of what happens to price.
B)   cannot respond at all to a change in price.
C)   can respond to a change in price,but the change is almost always inconsequential.
D)   can respond substantially to a change in price.E) None of the above
F) B) and D)

Question 6

If the price of calculators increases by 15 percent and the quantity demanded per week falls by 45 percent as a result,then the price elasticity of demand is 3.

Accepted Answer

A) True 
 B)False

Question 7

While in college,John and Bethany each buy five packages of mac-n-cheese per week.After they graduate and have full-time jobs,John buys six packages per week,but Bethany buys only two packages per week.When looking at income elasticity of demand for mac-n-cheese,John's

Accepted Answer

A)   is negative,and Bethany's is positive.
B)   is positive,and Bethany's is negative.
C)   is zero,and Bethany's approaches infinity.
D)   approaches infinity,and Bethany's is zero.E) All of the above
F) C) and D)

Question 8

Even the demand for a necessity such as gasoline will respond to a change in price,especially over a longer time horizon.

Accepted Answer

A) True 
 B)False

Question 9

Suppose that 500 candy bars are demanded at a particular price.If the price of candy bars rises from that price by 10 percent,the number of candy bars demanded falls to 480.Using the midpoint approach to calculate the price elasticity of demand,it follows that the

Accepted Answer

A)   demand for candy bars in this price range is unit elastic.
B)   price increase will decrease the total revenue of candy bar sellers.
C)   price elasticity of demand for candy bars in this price range is about 0.41.
D)   price elasticity of demand for candy bars in this price range is about 0.24.E) A) and D)
F) None of the above

Question 10

The income elasticity of demand for caviar tends to be

Accepted Answer

A)   high because caviar is relatively expensive.
B)   low because caviar is packaged in small containers.
C)   high because buyers generally feel that they can do without it.
D)   low because it is almost always in short supply.E) C) and D)
F) None of the above

Question 11

Figure 5-2 
-Refer to Figure 5-2.As price falls from Pa to Pb,we could use the three demand curves to calculate three different values of the price elasticity of demand.Which of the three demand curves would produce the smallest elasticity?

Accepted Answer

A)   D1
B)   D2
C)   D3
D)   All of the above are equally elastic.E) A) and B)
F) None of the above

Question 12

Figure 5-10 
-Refer to Figure 5-10.An increase in price from $30 to $35 would

Accepted Answer

A)   increase total revenue by $250
B)   decrease total revenue by $250.
C)   increase total revenue by $500.
D)   decrease total revenue by $500.E) None of the above
F) A) and B)

Question 13

If a 20% increase in price for a good results in a 15% decrease in quantity demanded,the price elasticity of demand is

Accepted Answer

A)   0.75.
B)   1.25.
C)   1.33.
D)   1.60.E) A) and B)
F) None of the above

Question 14

The demand for gasoline will respond more to a change in price over a period of five weeks than over a period of five years.

Accepted Answer

A) True 
 B)False

Question 15

Scenario 5-1
Suppose that 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 5-1.The price elasticity of supply for bread could be

Accepted Answer

A)   -1.
B)  0.5.
C)  0.
D)  1.5.E) None of the above
F) B) and C)

Question 16

Which of the following statements is correct?

Accepted Answer

A)   The demand for flat-screen computer monitors is more elastic than the demand for monitors in general.
B)   The demand for grandfather clocks is more elastic than the demand for clocks in general.
C)   The demand for cardboard is more elastic over a long period of time than over a short period of time.
D)   All of the above are correct.E) B) and C)
F) A) and B)

Question 17

Which of the following was not a reason OPEC failed to keep the price of oil high?

Accepted Answer

A)   Over the long run,producers of oil outside of OPEC responded to higher prices by increasing oil exploration and by building new extraction capacity.
B)   Consumers responded to higher prices with greater conservation.
C)   Consumers replaced old inefficient cars with newer efficient ones.
D)   The agreement OPEC members signed allowed each country to produce as much oil as each wanted.E) A) and B)
F) A) and C)

Question 18

Figure 5-3 
-Refer to Figure 5-3.Which demand curve is perfectly inelastic?

Accepted Answer

A)   A
B)   B
C)   C
D)   DE) All of the above
F) A) and B)

Question 19

A drug interdiction program that successfully reduces the supply of illegal drugs in the United States likely will

Accepted Answer

A)   raise the price,reduce the quantity,decrease total revenues,and decrease crime.
B)   lower the price,increase the quantity,increase total revenues,and increase crime.
C)   raise the price,increase the quantity,decrease total revenues,and increase crime.
D)   raise the price,reduce the quantity,increase total revenues,and increase crime.E) B) and D)
F) C) and D)

Question 20

In general,demand curves for luxuries tend to be price elastic.

Accepted Answer

A) True 
 B)False

Exam 5: Elasticity and Its Application

While in college,John and Bethany each buy five packages of mac-n-cheese per week.After they graduate and have full-time jobs,John buys six packages per week,but Bethany buys only two packages per week.When looking at income elasticity of demand for mac-n-cheese,John's

Correct Answer
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Which of the following statements is correct?

Correct Answer
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If the price of calculators increases by 15 percent and the quantity demanded per week falls by 45 percent as a result,then the price elasticity of demand is 3.

Correct Answer
verified

Correct Answer
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Figure 5-1 -Refer to Figure 5-1.Between point A and point B,the slope is equal to

Correct Answer
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Which of the following was not a reason OPEC failed to keep the price of oil high?

Correct Answer
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Figure 5-2 -Refer to Figure 5-2.As price falls from Pa to Pb,we could use the three demand curves to calculate three different values of the price elasticity of demand.Which of the three demand curves would produce the smallest elasticity?

Correct Answer
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Suppose that 500 candy bars are demanded at a particular price.If the price of candy bars rises from that price by 10 percent,the number of candy bars demanded falls to 480.Using the midpoint approach to calculate the price elasticity of demand,it follows that the

Correct Answer
verified

Correct Answer
verified

In general,demand curves for luxuries tend to be price elastic.

Correct Answer
verified

Figure 5-10 -Refer to Figure 5-10.An increase in price from $30 to $35 would

Correct Answer
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Figure 5-3 -Refer to Figure 5-3.Which demand curve is perfectly inelastic?

Correct Answer
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The income elasticity of demand for caviar tends to be

Correct Answer
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Suppose that two supply curves pass through the same point.One is steep,and the other is flat.Which of the following statements is correct?

Correct Answer
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Figure 5-13 -Refer to Figure 5-13.Over which range is the supply curve in this figure the least elastic?

Correct Answer
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In the long run,the quantity supplied of most goods

Correct Answer
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A drug interdiction program that successfully reduces the supply of illegal drugs in the United States likely will

Correct Answer
verified

If a 20% increase in price for a good results in a 15% decrease in quantity demanded,the price elasticity of demand is

Correct Answer
verified

Even the demand for a necessity such as gasoline will respond to a change in price,especially over a longer time horizon.

Correct Answer
verified

The demand for gasoline will respond more to a change in price over a period of five weeks than over a period of five years.

Correct Answer
verified

Exam 5: Elasticity and Its Application

While in college,John and Bethany each buy five packages of mac-n-cheese per week.After they graduate and have full-time jobs,John buys six packages per week,but Bethany buys only two packages per week.When looking at income elasticity of demand for mac-n-cheese,John's

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

If the price of calculators increases by 15 percent and the quantity demanded per week falls by 45 percent as a result,then the price elasticity of demand is 3.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 5-1 -Refer to Figure 5-1.Between point A and point B,the slope is equal to

Correct AnswerverifiedShow Answer

Which of the following was not a reason OPEC failed to keep the price of oil high?

Correct AnswerverifiedShow Answer

Figure 5-2 -Refer to Figure 5-2.As price falls from Pa to Pb,we could use the three demand curves to calculate three different values of the price elasticity of demand.Which of the three demand curves would produce the smallest elasticity?

Correct AnswerverifiedShow Answer

Suppose that 500 candy bars are demanded at a particular price.If the price of candy bars rises from that price by 10 percent,the number of candy bars demanded falls to 480.Using the midpoint approach to calculate the price elasticity of demand,it follows that the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In general,demand curves for luxuries tend to be price elastic.

Correct AnswerverifiedShow Answer

Figure 5-10 -Refer to Figure 5-10.An increase in price from $30 to $35 would

Correct AnswerverifiedShow Answer

Figure 5-3 -Refer to Figure 5-3.Which demand curve is perfectly inelastic?

Correct AnswerverifiedShow Answer

The income elasticity of demand for caviar tends to be

Correct AnswerverifiedShow Answer

Suppose that two supply curves pass through the same point.One is steep,and the other is flat.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Figure 5-13 -Refer to Figure 5-13.Over which range is the supply curve in this figure the least elastic?

Correct AnswerverifiedShow Answer

In the long run,the quantity supplied of most goods

Correct AnswerverifiedShow Answer

A drug interdiction program that successfully reduces the supply of illegal drugs in the United States likely will

Correct AnswerverifiedShow Answer

If a 20% increase in price for a good results in a 15% decrease in quantity demanded,the price elasticity of demand is

Correct AnswerverifiedShow Answer

Even the demand for a necessity such as gasoline will respond to a change in price,especially over a longer time horizon.

Correct AnswerverifiedShow Answer

The demand for gasoline will respond more to a change in price over a period of five weeks than over a period of five years.

Correct AnswerverifiedShow Answer

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