Question 1

Studies indicate that the price elasticity of demand for beer is about 0.9.A government policy aimed at reducing beer consumption changed the price of a case of beer from $10 to $20.According to the midpoint method,the government policy should have reduced beer consumption by

Accepted Answer

A)   30%.
B)   40%.
C)   60%.
D)   74%.E) None of the above
F) A) and C)

Question 2

Figure 5-12 1 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." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 5-12.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.E) C) and D)
F) B) and D)

Question 3

The cross-price elasticity of garlic salt and onion salt is -2,which indicates that garlic salt and onion salt are substitutes.

Accepted Answer

A) True 
 B)False

Question 4

Elasticity is

Accepted Answer

A)   a measure of how much buyers and sellers respond to changes in market conditions.
B)   the study of how the allocation of resources affects economic well-being.
C)   the maximum amount that a buyer will pay for a good.
D)   the value of everything a seller must give up to produce a good.E) A) and D)
F) C) and D)

Question 5

If demand is price inelastic,then

Accepted Answer

A)   buyers do not respond much to a change in price.
B)   buyers respond substantially to a change in price,but the response is very slow.
C)   buyers do not alter their quantities demanded much in response to advertising,fads,or general changes in tastes.
D)   the demand curve is very flat.E) None of the above
F) A) and D)

Question 6

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 7

Figure 5-4 
-Refer to Figure 5-4.If the price increases in the region of the demand curve between points A and B,we can expect total revenue to

Accepted Answer

A)   increase.
B)   stay the same.
C)   decrease.
D)   first increase,then decrease until total revenue is maximized.E) B) and C)
F) A) and B)

Question 8

Figure 5-3 
-Refer to Figure 5-3.Which demand curve is unit elastic?

Accepted Answer

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

Question 9

Table 5-1
 
-Refer to Table 5-1.Using the midpoint method,demand is unit elastic when quantity demanded changes from

Accepted Answer

A)   500 to 400.
B)   400 to 300.
C)   300 to 200.
D)   200 to 100.E) A) and C)
F) A) and B)

Question 10

Charles purchases 20 basketball tickets per year when his annual income is $50,000 and 25 basketball tickets when his annual income is $60,000.Charles's income elasticity of demand for basketball ticket is

Accepted Answer

A)   0.82,and basketball tickets are a normal good.
B)   0.82,and basketball tickets are an inferior good.
C)   1.22,and basketball tickets are a normal good.
D)   1.22,and basketball tickets are an inferior good.E) A) and B)
F) B) and C)

Question 11

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

Question 12

When demand is perfectly inelastic,the demand curve will be

Accepted Answer

A)   negatively sloped,because buyers decrease their purchases when the price rises.
B)   vertical,because buyers purchase the same amount as before whenever the price rises or falls.
C)   positively sloped,because buyers increase their purchases when price rises.
D)   positively sloped,because buyers increase their total expenditures when price rises.E) C) and D)
F) A) and B)

Question 13

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

Accepted Answer

A)   Price elasticity of demand =
B)   Price elasticity of demand =
C)   Price elasticity of demand =
D)   Price elasticity of demand =E) None of the above
F) A) and D)

Question 14

If we observe that when the price of chocolate increases by 10%,total revenue increases by 10%,then the demand for chocolate is unit price elastic.

Accepted Answer

A) True 
 B)False

Question 15

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.E) B) and D)
F) None of the above

Question 16

Suppose that Juan Carlos is filling out a survey that he received in the mail.The survey asks him what he would do if the price of his favorite toothpaste increased.Juan Carlos reports that he would switch to a different brand.The survey asks what he would do if the price of all toothpastes increased.Juan Carlos reports that he must use toothpaste,so he would have to adjust his spending elsewhere.These examples illustrate the importance of

Accepted Answer

A)   changes in total revenue 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) A) and B)
F) A) and C)

Question 17

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) B) and D)
F) A) and D)

Question 18

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

Accepted Answer

A)   elastic,and raising price will increase total revenue.
B)   inelastic,and raising price will increase total revenue.
C)   elastic,and lowering price will increase total revenue.
D)   inelastic,and lowering price will increase total revenue.E) A) and B)
F) None of the above

Question 19

A government program that pays farmers not to plant corn on part of their land can help farmers not only through the subsidy payments to farmers who participate in the program but also by raising the market price of corn.

Accepted Answer

A) True 
 B)False

Question 20

Figure 5-14 
-Refer to Figure 5-14.Along which of these segments of the supply curve is supply most elastic?

Accepted Answer

A)   AB
B)   CD
C)   DH
D)   GHE) All of the above
F) C) and D)

Exam 5: Elasticity and Its Application

Table 5-1 -Refer to Table 5-1.Using the midpoint method,demand is unit elastic when quantity demanded changes from

Correct Answer
verified

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 Answer
verified

Figure 5-3 -Refer to Figure 5-3.Which demand curve is unit elastic?

Correct Answer
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Figure 5-8 -Refer to Figure 5-8.For prices above $5,demand is price

Correct Answer
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If demand is price inelastic,then

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

Correct Answer
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Elasticity is

Correct Answer
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Figure 5-12 -Refer to Figure 5-12.If rectangle D is larger than rectangle A,then

Correct Answer
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The cross-price elasticity of garlic salt and onion salt is -2,which indicates that garlic salt and onion salt are substitutes.

Correct Answer
verified

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

Correct Answer
verified

Figure 5-4 -Refer to Figure 5-4.If the price increases in the region of the demand curve between points A and B,we can expect total revenue to

Correct Answer
verified

Studies indicate that the price elasticity of demand for beer is about 0.9.A government policy aimed at reducing beer consumption changed the price of a case of beer from $10 to $20.According to the midpoint method,the government policy should have reduced beer consumption by

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

If we observe that when the price of chocolate increases by 10%,total revenue increases by 10%,then the demand for chocolate is unit price elastic.

Correct Answer
verified

Correct Answer
verified

The price elasticity of supply measures how much

Correct Answer
verified

A government program that pays farmers not to plant corn on part of their land can help farmers not only through the subsidy payments to farmers who participate in the program but also by raising the market price of corn.

Correct Answer
verified

When demand is perfectly inelastic,the demand curve will be

Correct Answer
verified

Charles purchases 20 basketball tickets per year when his annual income is $50,000 and 25 basketball tickets when his annual income is $60,000.Charles's income elasticity of demand for basketball ticket is

Correct Answer
verified

Figure 5-14 -Refer to Figure 5-14.Along which of these segments of the supply curve is supply most elastic?

Correct Answer
verified

Exam 5: Elasticity and Its Application

Table 5-1 -Refer to Table 5-1.Using the midpoint method,demand is unit elastic when quantity demanded changes from

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

Figure 5-3 -Refer to Figure 5-3.Which demand curve is unit elastic?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If demand is price inelastic,then

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Elasticity is

Correct AnswerverifiedShow Answer

Figure 5-12 -Refer to Figure 5-12.If rectangle D is larger than rectangle A,then

Correct AnswerverifiedShow Answer

The cross-price elasticity of garlic salt and onion salt is -2,which indicates that garlic salt and onion salt are substitutes.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 5-4 -Refer to Figure 5-4.If the price increases in the region of the demand curve between points A and B,we can expect total revenue to

Correct AnswerverifiedShow Answer

Studies indicate that the price elasticity of demand for beer is about 0.9.A government policy aimed at reducing beer consumption changed the price of a case of beer from $10 to $20.According to the midpoint method,the government policy should have reduced beer consumption by

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

If we observe that when the price of chocolate increases by 10%,total revenue increases by 10%,then the demand for chocolate is unit price elastic.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The price elasticity of supply measures how much

Correct AnswerverifiedShow Answer

A government program that pays farmers not to plant corn on part of their land can help farmers not only through the subsidy payments to farmers who participate in the program but also by raising the market price of corn.

Correct AnswerverifiedShow Answer

When demand is perfectly inelastic,the demand curve will be

Correct AnswerverifiedShow Answer

Charles purchases 20 basketball tickets per year when his annual income is $50,000 and 25 basketball tickets when his annual income is $60,000.Charles's income elasticity of demand for basketball ticket is

Correct AnswerverifiedShow Answer

Figure 5-14 -Refer to Figure 5-14.Along which of these segments of the supply curve is supply most elastic?

Correct AnswerverifiedShow Answer

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