Question 1

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) A) and B)

Question 2

In January the price of dark chocolate candy bars was $2.00, and Willy's Chocolate Factory produced 80 pounds. In February the price of dark chocolate candy bars was $2.50, and Willy's produced 110 pounds. In March the price of dark chocolate candy bars was $3.00, and Willy's produced 140 pounds. The price elasticity of supply of Willy's dark chocolate candy bars was about

Accepted Answer

A)   0.70 when the price increased from $2.00 to $2.50 and 0.76 when the price increased from $2.50 to $3.00.
B)   0.88 when the price increased from $2.00 to $2.50 and 1.08 when the price increased from $2.50 to $3.00.
C)   1.42 when the price increased from $2.00 to $2.50 and 1.32 when the price increased from $2.50 to $3.00.
D)   1.50 when the price increased from $2.00 to $2.50 and 1.18 when the price increased from $2.50 to $3.00.E) None of the above
F) B) and C)

Question 3

Jerome says that he will spend exactly $25 each month on new apps for his mobile device, regardless of the price of apps. Jerome's demand for apps is

Accepted Answer

A)   perfectly elastic.
B)   unit elastic.
C)   perfectly inelastic.
D)   somewhat inelastic, but not perfectly inelastic.E) All of the above
F) A) and B)

Question 4

If a supply curve is perfectly vertical, what is the value of the price elasticity of supply?

Accepted Answer

The answer of If a supply curve is perfectly vertical,...

Question 5

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 6

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 D)
F) B) and C)

Question 7

For a particular good, a 12 percent increase in price causes a 3 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Accepted Answer

A)   There are many substitutes for this good.
B)   The good is a necessity.
C)   The market for the good is narrowly defined.
D)   The relevant time horizon is long.E) A) and B)
F) A) and D)

Question 8

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.E) C) and D)
F) A) and B)

Question 9

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 10

A good will have a more elastic demand, the

Accepted Answer

A)   greater the availability of close substitutes.
B)   more broad the definition of the market.
C)   shorter the period of time.
D)   more it is regarded as a necessity.E) None of the above
F) All of the above

Question 11

When quantity moves proportionately the same amount as price, demand is

Accepted Answer

A)   elastic, and the price elasticity of demand is 1.
B)   perfectly elastic, and the price elasticity of demand is infinitely large.
C)   perfectly inelastic, and the price elasticity of demand is 0.
D)   unit elastic, and the price elasticity of demand is 1.E) B) and C)
F) A) and D)

Question 12

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

Accepted Answer

A)   dental floss
B)   milk
C)   salt
D)   diamond earringsE) A) and B)
F) A) and C)

Question 13

Refer to Table 5-6. 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) All of the above
F) None of the above

Question 14

For a particular good, an 8 percent increase in price causes a 4 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Accepted Answer

A)   There are many close substitutes for this good.
B)   The good is a luxury.
C)   The market for the good is broadly defined.
D)   The relevant time horizon is long.E) A) and B)
F) A) and C)

Question 15

Suppose that an increase in the price of melons from $1.30 to $1.80 per pound increases the quantity of melons that melon farmers produce from 1.2 million pounds to 1.6 million pounds. Using the midpoint method, what is the approximate value of the price elasticity of supply?

Accepted Answer

A)   0.67
B)   0.89
C)   1.00
D)   1.13E) None of the above
F) A) and D)

Question 16

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

Accepted Answer

A)   $16 to $40
B)   $40 to $100
C)   $100 to $220
D)   $220 to $430E) A) and D)
F) None of the above

Question 17

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 B)
F) A) and C)

Question 18

Suppose that 300 bottles of soda are demanded at a particular price. If the price of a bottle of soda rises from that price by 6 percent, the number of bottles of soda demanded falls to 275. Using the midpoint approach to calculate the price elasticity of demand, it follows that the

Accepted Answer

A)   demand for bottles of soda in this price range is perfectly elastic.
B)   price increase will increase the total revenue of soda sellers.
C)   price elasticity of demand for bottles of soda in this price range is about 0.69.
D)   price elasticity of demand for bottles of soda in this price range is about 1.45.E) A) and D)
F) All of the above

Question 19

Refer to Figure 5-5. At a price of $50 per unit, sellers' total revenue equals

Accepted Answer

A)   $500.
B)   $750.
C)   $1000.
D)   $1250.E) All of the above
F) None of the above

Question 20

If demand is price inelastic, then when price rises, total revenue

Accepted Answer

A)   will fall.
B)   will rise.
C)   will remain unchanged.
D)   may rise, fall, or remain unchanged. More information is need to determine the change in total revenue with certainty.E) A) and B)
F) A) and D)

Exam 5: Elasticity and Its Application

Refer to Figure 5-5. At a price of $50 per unit, sellers' total revenue equals

Correct Answer
verified

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

Correct Answer
verified

Suppose that 300 bottles of soda are demanded at a particular price. If the price of a bottle of soda rises from that price by 6 percent, the number of bottles of soda demanded falls to 275. Using the midpoint approach to calculate the price elasticity of demand, it follows that the

Correct Answer
verified

Refer to Table 5-6. Using the midpoint method, demand is unit elastic when quantity demanded changes from

Correct Answer
verified

A good will have a more elastic demand, the

Correct Answer
verified

If demand is price inelastic, then when price rises, total revenue

Correct Answer
verified

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

Correct Answer
verified

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

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

For a good that is a necessity,

Correct Answer
verified

For a particular good, an 8 percent increase in price causes a 4 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Correct Answer
verified

Jerome says that he will spend exactly $25 each month on new apps for his mobile device, regardless of the price of apps. Jerome's demand for apps is

Correct Answer
verified

Correct Answer
verified

For a particular good, a 12 percent increase in price causes a 3 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Correct Answer
verified

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

Correct Answer
verified

Suppose that an increase in the price of melons from $1.30 to $1.80 per pound increases the quantity of melons that melon farmers produce from 1.2 million pounds to 1.6 million pounds. Using the midpoint method, what is the approximate value of the price elasticity of supply?

Correct Answer
verified

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

Correct Answer
verified

When quantity moves proportionately the same amount as price, demand is

Correct Answer
verified

If a supply curve is perfectly vertical, what is the value of the price elasticity of supply?

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

Exam 5: Elasticity and Its Application

Refer to Figure 5-5. At a price of $50 per unit, sellers' total revenue equals

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose that 300 bottles of soda are demanded at a particular price. If the price of a bottle of soda rises from that price by 6 percent, the number of bottles of soda demanded falls to 275. Using the midpoint approach to calculate the price elasticity of demand, it follows that the

Correct AnswerverifiedShow Answer

Refer to Table 5-6. Using the midpoint method, demand is unit elastic when quantity demanded changes from

Correct AnswerverifiedShow Answer

A good will have a more elastic demand, the

Correct AnswerverifiedShow Answer

If demand is price inelastic, then when price rises, total revenue

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

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

For a good that is a necessity,

Correct AnswerverifiedShow Answer

For a particular good, an 8 percent increase in price causes a 4 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Correct AnswerverifiedShow Answer

Jerome says that he will spend exactly $25 each month on new apps for his mobile device, regardless of the price of apps. Jerome's demand for apps is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

For a particular good, a 12 percent increase in price causes a 3 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose that an increase in the price of melons from $1.30 to $1.80 per pound increases the quantity of melons that melon farmers produce from 1.2 million pounds to 1.6 million pounds. Using the midpoint method, what is the approximate value of the price elasticity of supply?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When quantity moves proportionately the same amount as price, demand is

Correct AnswerverifiedShow Answer

If a supply curve is perfectly vertical, what is the value of the price elasticity of supply?

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

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