Question 1

Which of the following statements is not correct concerning government attempts to reduce the flow of illegal drugs into the country?

Accepted Answer

A)  Drug interdiction raises prices and total revenue in the drug market.
B)  Drug interdiction can increase drug-related crime.
C)  Drug interdiction shifts the demand curve for drugs to the left.
D)  Drug interdiction shifts the supply curve of drugs to the left.

Question 2

A linear,downward-sloping demand curve has constant elasticity,but not constant slope.

Accepted Answer

A) True 
 B)False

Question 3

A key determinant of the price elasticity of supply is the time period under consideration.Which of the following statements best explains this fact?

Accepted Answer

A)  Supply curves are steeper over long periods of time than over short periods of time.
B)  Buyers of goods tend to be more responsive to price changes over long periods of time than over short periods of time.
C)  The number of firms in a market tends to be more variable over short periods of time than over long periods of time.
D)  Firms tend to be more responsive to price changes over long periods of time than over short periods of time.

Question 4

Figure 5-7
 
-Refer to Figure 5-7.If rectangle D is larger than rectangle A,then

Accepted Answer

A)  demand is elastic between prices P₁ and P₂.
B)  a decrease in price from P₂ to P₁ will cause an increase in total revenue.
C)  the magnitude of the percent change in price between P₁ and P₂ is smaller than the magnitude of the corresponding percent change in quantity demanded.
D)  All of the above are correct.

Question 5

Figure 5-2
 
-Refer to Figure 5-2.Which of the following price changes would result in no change in sellers' total revenue?

Accepted Answer

A)  The price increases from $6 to $9.
B)  The price increases from $9 to $15.
C)  The price decreases from $12 to $9.
D)  The price decreases from $9 to $5.

Question 6

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,

Accepted Answer

A)  yours would be negative and your roommate's would be positive.
B)  yours would be positive and your roommate's would be negative.
C)  yours would be zero and your roommate's would approach infinity.
D)  yours would approach infinity and your roommate's would be zero.

Question 7

Figure 5-2
 
-Refer to Figure 5-2.Sellers' total revenue would increase if the price

Accepted Answer

A)  increased from $6 to $8.
B)  decreased from $18 to $16.
C)  decreased from $16 to $15.
D)  All of the above are correct.

Question 8

Which of the following statements does not help to explain why government drug interdiction increases drug-related crime?

Accepted Answer

A)  The demand for illegal drugs is inelastic.
B)  Interdiction results in drug addicts having a greater need for quick cash.
C)  Interdiction results in an increase in the amount of money needed to buy the same amount of drugs.
D)  Government drug programs are more lenient now with drug offenders than they were in the 1980s.

Question 9

Suppose that when the price of corn is $2 per bushel,farmers can sell 10 million bushels.When the price of corn is $3 per bushel,farmers can sell 8 million bushels.Which of the following statements is true?

Accepted Answer

A)  The demand for corn is income inelastic, and so an increase in the price of corn will increase the total revenue of corn farmers.
B)  The demand for corn is income elastic, and so an increase in the price of corn will increase the total revenue of corn farmers.
C)  The demand for corn is price inelastic, and so an increase in the price of corn will increase the total revenue of corn farmers.
D)  The demand for corn is price elastic, and so an increase in the price of corn will increase the total revenue of corn farmers.

Question 10

Between 1950 and 2000 there was a

Accepted Answer

A)  20 percent drop in the number of farmers, but farm output more than tripled.
B)  30 percent drop in the number of farmers, but farm output more than tripled.
C)  50 percent drop in the number of farmers, but farm output more than doubled.
D)  70 percent drop in the number of farmers, but farm output more than doubled.

Question 11

Muriel's income elasticity of demand for football tickets is 1.50.All else equal,this means that if her income increases by 20 percent,she will buy

Accepted Answer

A)  150 percent more football tickets.
B)  50 percent more football tickets.
C)  30 percent more football tickets.
D)  20 percent more football tickets.

Question 12

Generally,a firm is more willing and able to increase quantity supplied in response to a price change when

Accepted Answer

A)  the relevant time period is short rather than long.
B)  the relevant time period is long rather than short.
C)  supply is inelastic.
D)  the firm is experiencing capacity problems.

Question 13

Last month,sellers of good Y took in $100 in total revenue on sales of 50 units of good Y.This month sellers of good Y raised their price and took in $120 in total revenue on sales of 40 units of good Y.At the same time,the price of good X stayed the same,but sales of good X increased from 20 units to 40 units.We can conclude that goods X and Y are

Accepted Answer

A)  substitutes, and have a cross-price elasticity of 0.60.
B)  complements, and have a cross-price elasticity of 0.60.
C)  substitutes, and have a cross-price elasticity of 1.67.
D)  complements, and have a cross-price elasticity of 1.67.

Question 14

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

Accepted Answer

A)  water
B)  diamonds
C)  hamburgers
D)  housing

Question 15

OPEC failed to maintain a high price of oil in the long run,partly because both the supply of oil and the demand for oil are more elastic in the long run than in the short run.

Accepted Answer

A) True 
 B)False

Question 16

You are in charge of the local city-owned golf course.You need to increase the revenue generated by the golf course in order to meet expenses.The mayor advises you to increase the price of a round of golf.The city manager recommends reducing the price of a round of golf.You realize that

Accepted Answer

A)  the mayor thinks demand is elastic and the city manager thinks demand is inelastic.
B)  both the mayor and the city manager think that demand is elastic.
C)  both the mayor and the city manager think that demand is inelastic.
D)  the mayor thinks demand is inelastic and the city manager thinks demand is elastic.

Question 17

Elasticity improves our understanding of supply and demand by adding

Accepted Answer

A)  measures of equity.
B)  measures of efficiency.
C)  a quantitative element to our analysis.
D)  a qualitative element to our analysis.

Question 18

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

Accepted Answer

A)  the cross-price elasticity of demand is negative.
B)  the price elasticity of demand is negative.
C)  the income elasticity of demand is negative.
D)  an increase in the market supply will increase the equilibrium price of the good.

Question 19

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.

Question 20

A good will have a more inelastic demand,

Accepted Answer

A)  the greater the availability of close substitutes.
B)  the broader the definition of the market.
C)  the longer the period of time.
D)  the more it is regarded as a luxury.

Exam 5: Elasticity and Its Applications

Correct Answer
verified

A linear,downward-sloping demand curve has constant elasticity,but not constant slope.

Correct Answer
verified

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

Correct Answer
verified

Figure 5-7 -Refer to Figure 5-7.If rectangle D is larger than rectangle A,then

Correct Answer
verified

Figure 5-2 -Refer to Figure 5-2.Sellers' total revenue would increase if the price

Correct Answer
verified

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

Correct Answer
verified

Which of the following statements does not help to explain why government drug interdiction increases drug-related crime?

Correct Answer
verified

Figure 5-2 -Refer to Figure 5-2.Which of the following price changes would result in no change in sellers' total revenue?

Correct Answer
verified

Between 1950 and 2000 there was a

Correct Answer
verified

Correct Answer
verified

A key determinant of the price elasticity of supply is the time period under consideration.Which of the following statements best explains this fact?

Correct Answer
verified

Suppose that when the price of corn is $2 per bushel,farmers can sell 10 million bushels.When the price of corn is $3 per bushel,farmers can sell 8 million bushels.Which of the following statements is true?

Correct Answer
verified

Elasticity improves our understanding of supply and demand by adding

Correct Answer
verified

Muriel's income elasticity of demand for football tickets is 1.50.All else equal,this means that if her income increases by 20 percent,she will buy

Correct Answer
verified

Generally,a firm is more willing and able to increase quantity supplied in response to a price change when

Correct Answer
verified

You are in charge of the local city-owned golf course.You need to increase the revenue generated by the golf course in order to meet expenses.The mayor advises you to increase the price of a round of golf.The city manager recommends reducing the price of a round of golf.You realize that

Correct Answer
verified

OPEC failed to maintain a high price of oil in the long run,partly because both the supply of oil and the demand for oil are more elastic in the long run than in the short run.

Correct Answer
verified

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

Correct Answer
verified

A good will have a more inelastic demand,

Correct Answer
verified

Which of the following statements is not correct concerning government attempts to reduce the flow of illegal drugs into the country?

Correct Answer
verified

Exam 5: Elasticity and Its Applications

Correct AnswerverifiedShow Answer

A linear,downward-sloping demand curve has constant elasticity,but not constant slope.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 5-7 -Refer to Figure 5-7.If rectangle D is larger than rectangle A,then

Correct AnswerverifiedShow Answer

Figure 5-2 -Refer to Figure 5-2.Sellers' total revenue would increase if the price

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following statements does not help to explain why government drug interdiction increases drug-related crime?

Correct AnswerverifiedShow Answer

Figure 5-2 -Refer to Figure 5-2.Which of the following price changes would result in no change in sellers' total revenue?

Correct AnswerverifiedShow Answer

Between 1950 and 2000 there was a

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A key determinant of the price elasticity of supply is the time period under consideration.Which of the following statements best explains this fact?

Correct AnswerverifiedShow Answer

Suppose that when the price of corn is $2 per bushel,farmers can sell 10 million bushels.When the price of corn is $3 per bushel,farmers can sell 8 million bushels.Which of the following statements is true?

Correct AnswerverifiedShow Answer

Elasticity improves our understanding of supply and demand by adding

Correct AnswerverifiedShow Answer

Muriel's income elasticity of demand for football tickets is 1.50.All else equal,this means that if her income increases by 20 percent,she will buy

Correct AnswerverifiedShow Answer

Generally,a firm is more willing and able to increase quantity supplied in response to a price change when

Correct AnswerverifiedShow Answer

You are in charge of the local city-owned golf course.You need to increase the revenue generated by the golf course in order to meet expenses.The mayor advises you to increase the price of a round of golf.The city manager recommends reducing the price of a round of golf.You realize that

Correct AnswerverifiedShow Answer

OPEC failed to maintain a high price of oil in the long run,partly because both the supply of oil and the demand for oil are more elastic in the long run than in the short run.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A good will have a more inelastic demand,

Correct AnswerverifiedShow Answer

Which of the following statements is not correct concerning government attempts to reduce the flow of illegal drugs into the country?

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified