Question 1

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.

Question 2

Table 5-13
Consider the following demand schedule. 
-Refer to Table 5-13. Using the midpoint method, between which two prices is price elasticity of demand most inelastic?

Accepted Answer

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

Question 3

If a 25% change in price results in a 40% change in quantity supplied, then the price elasticity of supply is about

Accepted Answer

A)   0.63, and supply is elastic.
B)   0.63, and supply is inelastic.
C)   1.60, and supply is elastic.
D)   1.60, and supply is inelastic.

Question 4

Scenario 5-3
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 5-3. The price elasticity of supply for aged cheddar cheese could be

Accepted Answer

A)   -1.
B)   0.
C)   0.5.
D)   1.5.

Question 5

If the price elasticity of demand for a good is 1.4, then a 14 percent increase in the quantity demanded must be the result of

Accepted Answer

A)   a 0.1 percent decrease in the price.
B)   a 1 percent decrease in the price.
C)   a 10 percent decrease in the price.
D)   a 19.6 percent decrease in the price.

Question 6

Table 5-5 
-Refer to Table 5-5. When price is between $5 and $9, demand is

Accepted Answer

A)   elastic.
B)   unit elastic.
C)   inelastic.
D)   There is not enough information given to determine whether demand is elastic, unit elastic, or inelastic.

Question 7

When demand is unit elastic, price elasticity of demand equals

Accepted Answer

A)   1, and total revenue and price move in the same direction.
B)   1, and total revenue and price move in opposite directions.
C)   1, and total revenue does not change when price changes.
D)   0, and total revenue does not change when price changes.

Question 8

Price elasticity of supply measures how much the quantity supplied responds to changes in the price.

Accepted Answer

A) True 
 B)False

Question 9

The income elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in income.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following should be held constant when calculating an income elasticity of demand?

Accepted Answer

A)   the quantity of the good demanded
B)   the price of the good
C)   income
D)   All of the above should be held constant.

Question 11

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)   1.0
B)   2.33
C)   0.43
D)   0.1

Question 12

As the price elasticity of supply approaches infinity, very small changes in price lead to

Accepted Answer

A)   very large changes in quantity supplied.
B)   very small changes in quantity supplied.
C)   no change in quantity supplied.
D)   None of the above is correct.

Question 13

If the quantity supplied is the same regardless of price, then supply is

Accepted Answer

A)   elastic.
B)   perfectly elastic.
C)   perfectly inelastic.
D)   inelastic.

Question 14

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 15

Tyler purchases 5 pounds of hot dogs per month when his monthly income is $2,000 and 4 pounds of hot dogs per month when his monthly income is $2,200. Tyler's income elasticity of demand for hot dogs is

Accepted Answer

A)   2.33, and hot dogs are a normal good.
B)   -2.33, and hot dogs are an inferior good.
C)   0.43, and hot dogs are a normal good.
D)   -0.43, and hot dogs are an inferior good.

Question 16

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

Accepted Answer

A)   scissors
B)   fruit
C)   music downloads
D)   toothpaste

Question 17

Suppose a freeze in Florida significantly reduces the supply of oranges this year. As a result, would you expect the total revenue from the sale of orange juice to rise or fall? Explain.

Accepted Answer

Since oranges are an input into the prod...

Question 18

A key determinant of the price elasticity of supply is the

Accepted Answer

A)   time horizon.
B)   income of consumers.
C)   price elasticity of demand.
D)   importance of the good in a consumer's budget.

Question 19

Table 5-1 
-Refer to Table 5-1. Which of the following is consistent with the elasticities given in Table 5-1?

Accepted Answer

A)   A is laundry detergent and B is Tide.
B)   A is Diet Pepsi and B is soda.
C)   A is food and B is a yacht.
D)   A is toilet paper and B is candles.

Question 20

If the price elasticity of demand for a good is 6, then a 3 percent decrease in price results in

Accepted Answer

A)   a 20 percent increase in the quantity demanded.
B)   an 18 percent increase in the quantity demanded.
C)   a 2 percent increase in the quantity demanded.
D)   a 1.8 percent increase in the quantity demanded.

Exam 5: Elasticity and Its Application

If the quantity supplied is the same regardless of price, then supply is

Correct Answer
verified

When demand is unit elastic, price elasticity of demand equals

Correct Answer
verified

Suppose a freeze in Florida significantly reduces the supply of oranges this year. As a result, would you expect the total revenue from the sale of orange juice to rise or fall? Explain.

Correct Answer
verified
Since oranges are an input into the prod...
View Answer

Correct Answer
verified

Table 5-5 -Refer to Table 5-5. When price is between $5 and $9, demand is

Correct Answer
verified

Which of the following should be held constant when calculating an income elasticity of demand?

Correct Answer
verified

The income elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in income.

Correct Answer
verified

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

Correct Answer
verified

A key determinant of the price elasticity of supply is the

Correct Answer
verified

As the price elasticity of supply approaches infinity, very small changes in price lead to

Correct Answer
verified

If the price elasticity of demand for a good is 1.4, then a 14 percent increase in the quantity demanded must be the result of

Correct Answer
verified

When demand is elastic, a decrease in price will cause

Correct Answer
verified

Table 5-13 Consider the following demand schedule. -Refer to Table 5-13. Using the midpoint method, between which two prices is price elasticity of demand most inelastic?

Correct Answer
verified

If the price elasticity of demand for a good is 6, then a 3 percent decrease in price results in

Correct Answer
verified

If a 25% change in price results in a 40% change in quantity supplied, then the price elasticity of supply is about

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

Tyler purchases 5 pounds of hot dogs per month when his monthly income is $2,000 and 4 pounds of hot dogs per month when his monthly income is $2,200. Tyler's income elasticity of demand for hot dogs is

Correct Answer
verified

Price elasticity of supply measures how much the quantity supplied responds to changes in the price.

Correct Answer
verified

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

Correct Answer
verified

Table 5-1 -Refer to Table 5-1. Which of the following is consistent with the elasticities given in Table 5-1?

Correct Answer
verified

Exam 5: Elasticity and Its Application

If the quantity supplied is the same regardless of price, then supply is

Correct AnswerverifiedShow Answer

When demand is unit elastic, price elasticity of demand equals

Correct AnswerverifiedShow Answer

Suppose a freeze in Florida significantly reduces the supply of oranges this year. As a result, would you expect the total revenue from the sale of orange juice to rise or fall? Explain.

Correct AnswerverifiedSince oranges are an input into the prod...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Table 5-5 -Refer to Table 5-5. When price is between $5 and $9, demand is

Correct AnswerverifiedShow Answer

Which of the following should be held constant when calculating an income elasticity of demand?

Correct AnswerverifiedShow Answer

The income elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in income.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A key determinant of the price elasticity of supply is the

Correct AnswerverifiedShow Answer

As the price elasticity of supply approaches infinity, very small changes in price lead to

Correct AnswerverifiedShow Answer

If the price elasticity of demand for a good is 1.4, then a 14 percent increase in the quantity demanded must be the result of

Correct AnswerverifiedShow Answer

When demand is elastic, a decrease in price will cause

Correct AnswerverifiedShow Answer

Table 5-13 Consider the following demand schedule. -Refer to Table 5-13. Using the midpoint method, between which two prices is price elasticity of demand most inelastic?

Correct AnswerverifiedShow Answer

If the price elasticity of demand for a good is 6, then a 3 percent decrease in price results in

Correct AnswerverifiedShow Answer

If a 25% change in price results in a 40% change in quantity supplied, then the price elasticity of supply is about

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

Tyler purchases 5 pounds of hot dogs per month when his monthly income is $2,000 and 4 pounds of hot dogs per month when his monthly income is $2,200. Tyler's income elasticity of demand for hot dogs is

Correct AnswerverifiedShow Answer

Price elasticity of supply measures how much the quantity supplied responds to changes in the price.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Table 5-1 -Refer to Table 5-1. Which of the following is consistent with the elasticities given in Table 5-1?

Correct AnswerverifiedShow Answer

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Since oranges are an input into the prod...
View Answer

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