Question 1

Figure 5-13 
-Refer to Figure 5-13.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) C) and D)
F) All of the above

Question 2

Table 5-2
 
-Refer to Table 5-2.Using the midpoint method,if the price falls from $80 to $60,the price elasticity of demand is

Accepted Answer

A)   zero.
B)   unit elastic.
C)   inelastic.
D)   elastic.E) A) and C)
F) A) and B)

Question 3

Figure 5-6 
-Refer to Figure 5-6.Sellers' total revenue would increase if the price

Accepted Answer

A)   increased from $4 to $6.
B)   increased from $16 to $18.
C)   decreased from $8 to $6.
D)   All of the above are correct.E) A) and B)
F) B) and C)

Question 4

If the price elasticity of demand is 1.5,regardless of which two points on the demand curve are used to compute the elasticity,then demand is

Accepted Answer

A)   perfectly inelastic,and the demand curve is vertical.
B)   elastic,and the demand curve is a straight,downward-sloping line.
C)   perfectly elastic,and the demand curve is horizontal.
D)   elastic,and the demand curve is something other than a straight,downward-sloping line.E) B) and C)
F) None of the above

Question 5

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 6

A discovery that increases wheat yields per acre hurts farmers by increasing supply and lowering their total revenues.

Accepted Answer

A) True 
 B)False

Question 7

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 C)
F) B) and C)

Question 8

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 9

The flatter the demand curve that passes through a given point,the more inelastic the demand.

Accepted Answer

A) True 
 B)False

Question 10

When small changes in price lead to infinite changes in quantity demanded,demand is perfectly

Accepted Answer

A)   elastic,and the demand curve will be horizontal.
B)   inelastic,and the demand curve will be horizontal.
C)   elastic,and the demand curve will be vertical.
D)   inelastic,and the demand curve will be vertical.E) None of the above
F) All of the above

Question 11

Holding all other factors constant and using the midpoint method,if a candy manufacturer increases production by 20 percent when the market price of candy increases from $0.50 to $0.60,then supply is

Accepted Answer

A)   inelastic,since the price elasticity of supply is equal to .91.
B)   inelastic,since the price elasticity of supply is equal to 1.1.
C)   elastic,since the price elasticity of supply is equal to 0.91.
D)   elastic,since the price elasticity of supply is equal to 1.1.E) A) and B)
F) A) and C)

Question 12

Cross-price elasticity is used to determine whether goods are inferior or normal goods.

Accepted Answer

A) True 
 B)False

Question 13

Scenario 5-3
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 5-3.The equilibrium price 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) A) and D)
F) All of the above

Question 14

An advance in farm technology that results in an increased market supply is

Accepted Answer

A)   good for farmers because it raises prices for their products but bad for consumers because it raises prices consumers pay for food.
B)   bad for farmers because total revenue will fall but good for consumers because prices for food will fall.
C)   good for farmers because it raises prices for their products and also good for consumers because more output is available for consumption.
D)   bad for farmers because total revenue will fall and bad for consumers because farmers will raise the price of food to increase their total revenue.E) B) and D)
F) All of the above

Question 15

If demand is perfectly elastic,the demand curve is horizontal,and the price elasticity of demand equals 1.

Accepted Answer

A) True 
 B)False

Question 16

Ryan says that he would buy one cup of coffee every day regardless of the price.If he is telling the truth,Ryan's

Accepted Answer

A)   demand for coffee is perfectly inelastic.
B)   price elasticity of demand for coffee is 1.
C)   income elasticity of demand for coffee is 0.
D)   None of the above answers is correct.E) All of the above
F) None of the above

Question 17

Demand is said to be unit elastic if quantity demanded

Accepted Answer

A)   changes by the same percent as the price.
B)   changes by a larger percent than the price.
C)   changes by a smaller percent than the price.
D)   does not respond to a change in price.E) A) and C)
F) C) and D)

Question 18

A bakery would be willing to supply 500 donuts per day at a price of $0.50 each.At a price of $0.80,the bakery would be willing to supply 1,100 donuts.Using the midpoint method,the price elasticity of supply for donuts is about

Accepted Answer

A)   0.62,and supply is elastic.
B)   0.62,and supply is inelastic.
C)   1.63,and supply is elastic.
D)   1.63,and supply is inelastic.E) B) and D)
F) B) and C)

Question 19

At price of $1.20,a local pencil manufacturer is willing to supply 150 boxes per day.At a price of $1.40,the manufacturer is willing to supply 170 boxes per day.Using the midpoint method,the price elasticity of supply is about

Accepted Answer

A)   2.0.
B)   1.23.
C)   1.00.
D)   0.81.E) C) and D)
F) A) and B)

Question 20

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

Accepted Answer

A)   white chocolate chip with macadamia nut cookies
B)   Mrs.Field's chocolate chip cookies
C)   milk chocolate chip cookies
D)   cookiesE) B) and D)
F) B) and C)

Exam 5: Elasticity and Its Application

At price of $1.20,a local pencil manufacturer is willing to supply 150 boxes per day.At a price of $1.40,the manufacturer is willing to supply 170 boxes per day.Using the midpoint method,the price elasticity of supply is about

Correct AnswerverifiedShow Answer

Elasticity is

Correct AnswerverifiedShow Answer

Demand is said to be unit elastic if quantity demanded

Correct AnswerverifiedShow Answer

Table 5-2 -Refer to Table 5-2.Using the midpoint method,if the price falls from $80 to $60,the price elasticity of demand is

Correct AnswerverifiedShow Answer

The flatter the demand curve that passes through a given point,the more inelastic the demand.

Correct AnswerverifiedShow Answer

If demand is perfectly elastic,the demand curve is horizontal,and the price elasticity of demand equals 1.

Correct AnswerverifiedShow Answer

If the price elasticity of demand is 1.5,regardless of which two points on the demand curve are used to compute the elasticity,then demand is

Correct AnswerverifiedShow Answer

A bakery would be willing to supply 500 donuts per day at a price of $0.50 each.At a price of $0.80,the bakery would be willing to supply 1,100 donuts.Using the midpoint method,the price elasticity of supply for donuts is about

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Ryan says that he would buy one cup of coffee every day regardless of the price.If he is telling the truth,Ryan's

Correct AnswerverifiedShow Answer

Figure 5-13 -Refer to Figure 5-13.Over which range is the supply curve in this figure the most elastic?

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

An advance in farm technology that results in an increased market supply is

Correct AnswerverifiedShow Answer

When small changes in price lead to infinite changes in quantity demanded,demand is perfectly

Correct AnswerverifiedShow Answer

Holding all other factors constant and using the midpoint method,if a candy manufacturer increases production by 20 percent when the market price of candy increases from $0.50 to $0.60,then supply is

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

Figure 5-6 -Refer to Figure 5-6.Sellers' total revenue would increase if the price

Correct AnswerverifiedShow Answer

A discovery that increases wheat yields per acre hurts farmers by increasing supply and lowering their total revenues.

Correct AnswerverifiedShow Answer

Scenario 5-3 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 5-3.The equilibrium price will

Correct AnswerverifiedShow Answer

Cross-price elasticity is used to determine whether goods are inferior or normal goods.

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