Question 1

If we observe that when the price of chocolate decreases by 10%, quantity demanded increases by 25%, then the demand for chocolate is price elastic.

Accepted Answer

A) True 
 B)False

Question 2

Table 5-13
Consider the following demand schedule.
 
-Refer to Table 5-13. Using the midpoint method, what is the price elasticity of demand between $12 and $15?

Accepted Answer

The answer of Table 5-13
Consider the following demand schedule.
 
-Refer...

Question 3

Table 5-8
 
-Refer to Table 5-8. Using the midpoint method, what is the income elasticity of demand for good X?

Accepted Answer

A)   -3.5
B)   -0.29
C)   0.29
D)   3.5E) A) and B)
F) B) and C)

Question 4

Figure 5-4 
-Refer to Figure 5-4. Assume, for the good in question, two specific points on the demand curve are Q = 1,000, P= $40)  and Q = 1,500, P = $30) . Then which of the following scenarios is possible?

Accepted Answer

A)   Both of these points lie on the section of the demand curve from B to C.
B)   The vertical intercept of the demand curve is the point Q = 0, P = $60) .
C)   The horizontal intercept of the demand curve is the point Q = 1,800, P = $0) .
D)   Any of these scenarios is possible.E) B) and C)
F) A) and D)

Question 5

When consumers face rising gasoline prices, they typically

Accepted Answer

A)   reduce their quantity demanded more in the long run than in the short run.
B)   reduce their quantity demanded more in the short run than in the long run.
C)   do not reduce their quantity demanded in the short run or the long run.
D)   increase their quantity demanded in the short run but reduce their quantity demanded in the long run.E) A) and B)
F) A) and C)

Question 6

Knowing that the demand for wheat is inelastic, if all farmers voluntarily did not plant wheat on 10 percent of their land, then

Accepted Answer

A)   consumers of wheat would buy more wheat.
B)   wheat farmers would suffer a reduction in their total revenue.
C)   wheat farmers would experience an increase in their total revenue.
D)   the demand for wheat would decrease.E) B) and C)
F) None of the above

Question 7

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) A) and B)

Question 8

Demand is said to be inelastic if the

Accepted Answer

A)   quantity demanded changes proportionately more than price.
B)   price changes proportionately more than income.
C)   quantity demanded changes proportionately less than price.
D)   quantity demanded changes proportionately the same as price.E) B) and D)
F) A) and C)

Question 9

Supply is said to be inelastic if the quantity supplied responds substantially to changes in the price and elastic if the quantity supplied responds only slightly to price.

Accepted Answer

A) True 
 B)False

Question 10

Figure 5-6 
-Refer to Figure 5-6. For prices below $8, demand is price

Accepted Answer

A)   elastic, and total revenue will rise as price rises.
B)   inelastic, and total revenue will rise as price rises.
C)   elastic, and total revenue will fall as price rises.
D)   inelastic, and total revenue will fall as price rises.E) B) and C)
F) None of the above

Question 11

Demand for a good is said to be inelastic if the quantity demanded increases slightly when the price falls by a large amount.

Accepted Answer

A) True 
 B)False

Question 12

When the price of an eBook is $15.00, the quantity demanded is 400 eBooks per day. When the price falls to $10.00, the quantity demanded increases to 700. Given this information and using the midpoint method, we know that the demand for eBooks is

Accepted Answer

A)   inelastic.
B)   elastic.
C)   unit elastic.
D)   perfectly inelastic.E) B) and C)
F) None of the above

Question 13

If the price of walnuts rises, many people would switch from consuming walnuts to consuming pecans. But if the price of salt rises, people would have difficulty purchasing something to use in its place. These examples illustrate the importance of

Accepted Answer

A)   the availability of close substitutes in determining the price elasticity of demand.
B)   a necessity versus a luxury in determining the price elasticity of demand.
C)   the definition of a market in determining the price elasticity of demand.
D)   the time horizon in determining the price elasticity of demand.E) None of the above
F) C) and D)

Question 14

When demand is elastic, a decrease in price will cause

Accepted Answer

A)   an increase in total revenue.
B)   a decrease in total revenue.
C)   no change in total revenue but an increase in quantity demanded.
D)   no change in total revenue but a decrease in quantity demanded.E) A) and D)
F) A) and C)

Question 15

When the price of a good is $5, the quantity demanded is 100 units per month; when the price is $7, the quantity demanded is 80 units per month. Using the midpoint method, the price elasticity of demand is about

Accepted Answer

A)   0.22.
B)   0.67.
C)   1.33.
D)   1.50.E) All of the above
F) A) and C)

Question 16

Recently, in Smalltown, the price of Twinkies fell from $0.80 to $0.70. As a result, the quantity demanded of Ho- Ho's decreased from 120 to 100. What would be the appropriate elasticity to compute? Using the midpoint method, compute this elasticity. What does your answer tell you?

Accepted Answer

The appropriate elasticity to compute wo...

Question 17

Suppose that when the price rises by 20% for a particular good, the quantity demanded of that good falls by 10%.
The price elasticity of demand for this good is equal to 2.0.

Accepted Answer

A) True 
 B)False

Question 18

If the price elasticity of supply is 1.5, and a price increase led to a 3% increase in quantity supplied, then the price increase is about

Accepted Answer

A)   0.2%.
B)   0.5%.
C)   2.0%.
D)   4.5%.E) All of the above
F) B) and D)

Question 19

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 20

The price elasticity of supply measures how much

Accepted Answer

A)   the quantity supplied responds to changes in input prices.
B)   the quantity supplied responds to changes in the price of the good.
C)   the price of the good responds to changes in supply.
D)   sellers respond to changes in technology.E) B) and D)
F) B) and C)

Exam 5: Elasticity and Its Application

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

If we observe that when the price of chocolate decreases by 10%, quantity demanded increases by 25%, then the demand for chocolate is price elastic.

Correct AnswerverifiedShow Answer

If the price elasticity of supply is 1.5, and a price increase led to a 3% increase in quantity supplied, then the price increase is about

Correct AnswerverifiedShow Answer

Table 5-13 Consider the following demand schedule. -Refer to Table 5-13. Using the midpoint method, what is the price elasticity of demand between $12 and $15?

Correct AnswerverifiedShow Answer

Demand is said to be inelastic if the

Correct AnswerverifiedShow Answer

Figure 5-4 -Refer to Figure 5-4. Assume, for the good in question, two specific points on the demand curve are Q = 1,000, P= $40) and Q = 1,500, P = $30) . Then which of the following scenarios is possible?

Correct AnswerverifiedShow Answer

Demand for a good is said to be inelastic if the quantity demanded increases slightly when the price falls by a large amount.

Correct AnswerverifiedShow Answer

When the price of an eBook is $15.00, the quantity demanded is 400 eBooks per day. When the price falls to $10.00, the quantity demanded increases to 700. Given this information and using the midpoint method, we know that the demand for eBooks is

Correct AnswerverifiedShow Answer

Figure 5-6 -Refer to Figure 5-6. For prices below $8, demand is price

Correct AnswerverifiedShow Answer

Knowing that the demand for wheat is inelastic, if all farmers voluntarily did not plant wheat on 10 percent of their land, then

Correct AnswerverifiedShow Answer

Supply is said to be inelastic if the quantity supplied responds substantially to changes in the price and elastic if the quantity supplied responds only slightly to price.

Correct AnswerverifiedShow Answer

When consumers face rising gasoline prices, they typically

Correct AnswerverifiedShow Answer

Suppose that when the price rises by 20% for a particular good, the quantity demanded of that good falls by 10%. The price elasticity of demand for this good is equal to 2.0.

Correct AnswerverifiedShow Answer

When the price of a good is $5, the quantity demanded is 100 units per month; when the price is $7, the quantity demanded is 80 units per month. Using the midpoint method, the price elasticity of demand is about

Correct AnswerverifiedShow Answer

When demand is elastic, a decrease in price will cause

Correct AnswerverifiedShow Answer

Recently, in Smalltown, the price of Twinkies fell from $0.80 to $0.70. As a result, the quantity demanded of Ho- Ho's decreased from 120 to 100. What would be the appropriate elasticity to compute? Using the midpoint method, compute this elasticity. What does your answer tell you?

Correct AnswerverifiedThe appropriate elasticity to compute wo...View AnswerShow 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

Table 5-8 -Refer to Table 5-8. Using the midpoint method, what is the income elasticity of demand for good X?

Correct AnswerverifiedShow Answer

If the price of walnuts rises, many people would switch from consuming walnuts to consuming pecans. But if the price of salt rises, people would have difficulty purchasing something to use in its place. These examples illustrate the importance of

Correct AnswerverifiedShow Answer

The price elasticity of supply measures how much

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The appropriate elasticity to compute wo...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified