Question 1

For a good that is a necessity,

Accepted Answer

A)  quantity demanded tends to respond substantially to a change in price.
B)  demand tends to be inelastic.
C)  the law of demand does not apply.
D)  All of the above are correct.E) B) and C)
F) None of the above

Question 2

The midpoint method is used to compute elasticity because it

Accepted Answer

A)  automatically computes a positive number instead of a negative number.
B)  results in an elasticity that is the same as the slope of the demand curve.
C)  gives the same answer regardless of the direction of change.
D)  automatically rounds quantities to the nearest whole unit.E) None of the above
F) B) and C)

Question 3

Table 5-12 
-Refer to Table 5-12. Between which two quantities listed is demand most inelastic?

Accepted Answer

The answer of Table 5-12 
-Refer to Table 5-12. Between...

Question 4

Supply tends to be more elastic in the short run and more inelastic in the long run.

Accepted Answer

A) True 
 B)False

Question 5

Figure 5-1 
-Refer to Figure 5-1. Between point A and point B, price elasticity of demand is equal to

Accepted Answer

A)  0.33.
B)  0.67.
C)  1.5
D)  2.67.E) B) and C)
F) A) and B)

Question 6

If we observe that when the price of chocolate increases by 10%, quantity demanded falls by 5%, then the demand for chocolate is price inelastic.

Accepted Answer

A) True 
 B)False

Question 7

At a price of $1.20, a local coffee shop is willing to supply 100 cinnamon rolls per day. At a price of $1.40, the coffee shop would be willing to supply 150 cinnamon rolls per day. Using the midpoint method, the price elasticity of supply is about

Accepted Answer

A)  0.15
B)  0.375
C)  2.5
D)  2.60E) C) and D)
F) B) and D)

Question 8

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) All of the above
F) B) and C)

Question 9

Consider the following pairs of goods. For which of the two goods would you expect the demand to be more price elastic? Why?
a.water or diamonds
b.insulin or nasal decongestant spray
c.food in general or breakfast cereal
d.gasoline over the course of a week or gasoline over the course of a year
e.personal computers or IBM personal computers

Accepted Answer

a.Diamonds are luxuries, and water is a ...

Question 10

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) A) and B)
F) None of the above

Question 11

Scenario 5-4
Milk has an inelastic demand, and beef has an elastic demand. Suppose that a mysterious increase in bovine infertility decreases both the population of dairy cows and the population of beef cattle by 50 percent.
-Refer to Scenario 5-4. The equilibrium quantity will

Accepted Answer

A)  increase in both the milk and beef markets.
B)  increase in the milk market and decrease in the beef market.
C)  decrease in the milk market and increase in the beef market.
D)  decrease in both the milk and beef markets.E) C) and D)
F) B) and D)

Question 12

In which of the following situations would supply be the most elastic?

Accepted Answer

A)  An auto parts manufacturer is operating at capacity.
B)  A real estate developer in Boston is looking to build condos on the waterfront.
C)  A furniture manufacturer is operating its factory 8 hours per day.
D)  A hotel has all of its rooms booked for each night of the next 3 months.E) B) and C)
F) C) and D)

Question 13

The federal government is concerned about the negative effects of cigarette smoking in the United States. Suppose Congress is considering two plans. One plan would limit the production of cigarettes. The other would require manufacturers to include graphic photos on cigarette packages of people suffering cancer's effects. Which of the following statements is true?

Accepted Answer

A)  Both programs would increase the price of cigarettes.
B)  Both programs would reduce the quantity of cigarettes sold.
C)  Both programs would decrease revenues for cigarette manufacturers.
D)  All of the above are correct.E) A) and B)
F) A) and C)

Question 14

In January the price of widgets was $1.00, and Wendy's Widgets produced 80 widgets. In February the price of widgets was $1.50, and Wendy's Widgets produced 110 widgets. In March the price of widgets was $2.00, and Wendy's Widgets produced 140 widgets. The price elasticity of supply of Wendy's Widgets was about

Accepted Answer

A)  0.79 when the price increased from $1.00 to $1.50 and 0.84 when the price increased from $1.50 to $2.00.
B)  1.27 when the price increased from $1.00 to $1.50 and 1.19 when the price increased from $1.50 to $2.00.
C)  0.79 when the price increased from $1.00 to $1.50 and 1.19 when the price increased from $1.50 to $2.00.
D)  1.27 when the price increased from $1.00 to $1.50 and 0.84 when the price increased from $1.50 to $2.00.E) All of the above
F) A) and B)

Question 15

Figure 5-14 
-Refer to Figure 5-14. Over which range is the supply curve in this figure the most elastic?

Accepted Answer

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

Question 16

When the price of a bracelet was $28 each, the jewelry shop sold 128 per month. When it raised the price to $32 each, it sold 112 per month. Using the midpoint method, the price elasticity of demand for bracelets is

Accepted Answer

A)  1.14.
B)  1.
C)  0.25.
D)  0.13.E) A) and C)
F) B) and D)

Question 17

Which of the following statements is not valid when supply is perfectly elastic?

Accepted Answer

A)  The elasticity of supply approaches infinity.
B)  The supply curve is horizontal.
C)  Very small changes in price lead to very large changes in quantity supplied.
D)  The time period under consideration is more likely a short period rather than a long period.E) None of the above
F) A) and B)

Question 18

Suppose the cross-price elasticity of demand between hot dogs and mustard is -2.00. This implies that a 20 percent increase in the price of hot dogs will cause the quantity of mustard purchased to

Accepted Answer

A)  fall by 200 percent.
B)  fall by 40 percent.
C)  rise by 200 percent.
D)  rise by 40 percent.E) B) and C)
F) B) and D)

Question 19

If the income elasticity of demand for a good is 0.56, is the good a normal or inferior good?

Accepted Answer

The good i...

Question 20

Table 5-12 
-Refer to Table 5-12. Between which two quantities listed is demand unit elastic?

Accepted Answer

The answer of Table 5-12 
-Refer to Table 5-12. Between...

Exam 5: Elasticity and Its Application

When the price of a bracelet was $28 each, the jewelry shop sold 128 per month. When it raised the price to $32 each, it sold 112 per month. Using the midpoint method, the price elasticity of demand for bracelets is

Correct Answer
verified

Suppose the cross-price elasticity of demand between hot dogs and mustard is -2.00. This implies that a 20 percent increase in the price of hot dogs will cause the quantity of mustard purchased to

Correct Answer
verified

If the income elasticity of demand for a good is 0.56, is the good a normal or inferior good?

Correct Answer
verified
The good i...
View Answer

Figure 5-14 -Refer to Figure 5-14. Over which range is the supply curve in this figure the most elastic?

Correct Answer
verified

Correct Answer
verified

At a price of $1.20, a local coffee shop is willing to supply 100 cinnamon rolls per day. At a price of $1.40, the coffee shop would be willing to supply 150 cinnamon rolls per day. Using the midpoint method, the price elasticity of supply is about

Correct Answer
verified

Correct Answer
verified
a.Diamonds are luxuries, and water is a ...
View Answer

In which of the following situations would supply be the most elastic?

Correct Answer
verified

If we observe that when the price of chocolate increases by 10%, quantity demanded falls by 5%, then the demand for chocolate is price inelastic.

Correct Answer
verified

Supply tends to be more elastic in the short run and more inelastic in the long run.

Correct Answer
verified

Correct Answer
verified

Table 5-12 -Refer to Table 5-12. Between which two quantities listed is demand most inelastic?

Correct Answer
verified

Which of the following statements is not valid when supply is perfectly elastic?

Correct Answer
verified

Figure 5-1 -Refer to Figure 5-1. Between point A and point B, price elasticity of demand is equal to

Correct Answer
verified

Table 5-12 -Refer to Table 5-12. Between which two quantities listed is demand unit elastic?

Correct Answer
verified

Scenario 5-4 Milk has an inelastic demand, and beef has an elastic demand. Suppose that a mysterious increase in bovine infertility decreases both the population of dairy cows and the population of beef cattle by 50 percent. -Refer to Scenario 5-4. The equilibrium quantity will

Correct Answer
verified

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

Correct Answer
verified

The income elasticity of demand for caviar tends to be

Correct Answer
verified

For a good that is a necessity,

Correct Answer
verified

The midpoint method is used to compute elasticity because it

Correct Answer
verified

Exam 5: Elasticity and Its Application

When the price of a bracelet was $28 each, the jewelry shop sold 128 per month. When it raised the price to $32 each, it sold 112 per month. Using the midpoint method, the price elasticity of demand for bracelets is

Correct AnswerverifiedShow Answer

Suppose the cross-price elasticity of demand between hot dogs and mustard is -2.00. This implies that a 20 percent increase in the price of hot dogs will cause the quantity of mustard purchased to

Correct AnswerverifiedShow Answer

If the income elasticity of demand for a good is 0.56, is the good a normal or inferior good?

Correct AnswerverifiedThe good i...View AnswerShow Answer

Figure 5-14 -Refer to Figure 5-14. Over which range is the supply curve in this figure the most elastic?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

At a price of $1.20, a local coffee shop is willing to supply 100 cinnamon rolls per day. At a price of $1.40, the coffee shop would be willing to supply 150 cinnamon rolls per day. Using the midpoint method, the price elasticity of supply is about

Correct AnswerverifiedShow Answer

Correct Answerverifieda.Diamonds are luxuries, and water is a ...View AnswerShow Answer

In which of the following situations would supply be the most elastic?

Correct AnswerverifiedShow Answer

If we observe that when the price of chocolate increases by 10%, quantity demanded falls by 5%, then the demand for chocolate is price inelastic.

Correct AnswerverifiedShow Answer

Supply tends to be more elastic in the short run and more inelastic in the long run.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 5-12 -Refer to Table 5-12. Between which two quantities listed is demand most inelastic?

Correct AnswerverifiedShow Answer

Which of the following statements is not valid when supply is perfectly elastic?

Correct AnswerverifiedShow Answer

Figure 5-1 -Refer to Figure 5-1. Between point A and point B, price elasticity of demand is equal to

Correct AnswerverifiedShow Answer

Table 5-12 -Refer to Table 5-12. Between which two quantities listed is demand unit elastic?

Correct AnswerverifiedShow Answer

Scenario 5-4 Milk has an inelastic demand, and beef has an elastic demand. Suppose that a mysterious increase in bovine infertility decreases both the population of dairy cows and the population of beef cattle by 50 percent. -Refer to Scenario 5-4. The equilibrium quantity will

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The income elasticity of demand for caviar tends to be

Correct AnswerverifiedShow Answer

For a good that is a necessity,

Correct AnswerverifiedShow Answer

The midpoint method is used to compute elasticity because it

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The good i...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
verified
a.Diamonds are luxuries, and water is a ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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