Question 1

On a certain supply curve, one point is quantity supplied = 200, price = $4.00)  and another point is quantity supplied = 250, price = $4.50) . Using the midpoint method, the price elasticity of supply is about

Accepted Answer

A)   0.22.
B)   0.53.
C)   1.00.
D)   1.89.E) C) and D)
F) B) and C)

Question 2

If the quantity demanded of a certain good responds only slightly to a change in the price of the good, then the

Accepted Answer

A)   demand for the good is said to be elastic.
B)   demand for the good is said to be inelastic.
C)   law of demand does not apply to the good.
D)   demand curve for the good shifts only slightly in response to a change in price.E) A) and B)
F) A) and C)

Question 3

The supply of oil is likely to be

Accepted Answer

A)   inelastic in both the short run and long run.
B)   elastic in both the short run and long run.
C)   elastic in the short run and inelastic in the long run.
D)   inelastic in the short run and elastic in the long run.E) A) and D)
F) B) and C)

Question 4

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

Question 5

Which of the following is an illustration of the market for original paintings by deceased artist Vincent Van Gogh?

Accepted Answer

A)   A
B)   B
C)   C
D)   DE) None of the above
F) All of the above

Question 6

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

Question 7

Farm programs that pay farmers not to plant crops on all their land

Accepted Answer

A)   hurt farmers by lowering their total revenue and hurt consumers by causing shortages of some food items.
B)   help farmers by cutting costs, which helps consumers by lowering food prices.
C)   help farmers by increasing total revenue in the market but hurt consumers by raising food prices.
D)   help farmers directly since they receive government payments but have no real effects on consumers.E) A) and C)
F) All of the above

Question 8

Table 5-7
The following table shows a portion of the demand schedule for a particular good at various levels of income.
 
-Refer to Table 5-7. Using the midpoint method, at a price of $16, what is the income elasticity of demand when income rises from $5,000 to $10,000?

Accepted Answer

A)   0.00
B)   0.50
C)   1.00
D)   1.50E) C) and D)
F) None of the above

Question 9

Refer to Table 5-9. Along which of the supply curves does quantity supplied move proportionately more than the price?

Accepted Answer

A)   along supply curve B only
B)   along supply curves B and C
C)   along all three supply curves
D)   None. Quantity supplied moves proportionately less than the price along all of the three supply curves.E) B) and D)
F) A) and B)

Question 10

Whether a good is a luxury or necessity depends on the

Accepted Answer

A)   price of the good.
B)   preferences of the buyer.
C)   intrinsic properties of the good.
D)   scarcity of the good.E) B) and C)
F) A) and C)

Question 11

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) A) and D)
F) C) and D)

Question 12

Studies indicate that the price elasticity of demand for cigarettes is about 0.4. A government policy aimed at reducing smoking changed the price of a pack of cigarettes from $2 to $6. According to the midpoint method, the government policy should have reduced smoking by

Accepted Answer

A)   30%.
B)   40%.
C)   80%.
D)   250%.E) A) and C)
F) A) and B)

Question 13

If the demand for textbooks is inelastic, then an increase in the price of textbooks will

Accepted Answer

A)   increase total revenue of textbook sellers.
B)   decrease total revenue of textbook sellers.
C)   not change total revenue of textbook sellers.
D)   There is not enough information to answer this question.E) A) and D)
F) None of the above

Question 14

Figure 5-8 
-Refer to Figure 5-8. When the price is $15, total revenue is

Accepted Answer

A)   $1,500.
B)   $2,500.
C)   $3,500.
D)   $4,500.E) None of the above
F) B) and C)

Question 15

For a particular good, a 10 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)   The relevant time horizon is short.
B)   The good is a luxury.
C)   The market for the good is narrowly defined.
D)   There are many close substitutes for this good.E) A) and B)
F) A) and C)

Question 16

With regard to elasticity, if a firm has a longer time to adjust to a price increase, supply will be more

Accepted Answer

The answer of With regard to elasticity, if a firm...

Question 17

Scenario 5-5
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 5-5. 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) B) and C)

Question 18

Suppose a farmer knows that he will be able to harvest and sell 3,000 bushels of wheat. Would he prefer a market in which conditions are favorable and most farmers harvest large crops or a market in which conditions are unfavorable and many farmers harvest small crops? Why?

Accepted Answer

The farmer prefers a market in...

Question 19

Recently, in Smalltown, the price of Twinkies fell from $0.80 to $0.70. As a result, the quantity demanded of Ho- Ho's decreased from 120 to 100. What would be the appropriate elasticity to compute? Using the midpoint method, compute this elasticity. What does your answer tell you?

Accepted Answer

The appropriate elasticity to compute wo...

Question 20

Table 5-4
The following table shows the demand schedule for a particular good.
 
-Refer to Table 5-4. Using the midpoint method, what is the price elasticity of demand when price rises from $12 to $16?

Accepted Answer

A)   0.43
B)   0.67
C)   2.33
D)   4E) A) and B)
F) A) and C)

Exam 5: Elasticity and Its Application

Suppose a farmer knows that he will be able to harvest and sell 3,000 bushels of wheat. Would he prefer a market in which conditions are favorable and most farmers harvest large crops or a market in which conditions are unfavorable and many farmers harvest small crops? Why?

Correct Answer
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The farmer prefers a market in...
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Correct Answer
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The supply of oil is likely to be

Correct Answer
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Table 5-4 The following table shows the demand schedule for a particular good. -Refer to Table 5-4. Using the midpoint method, what is the price elasticity of demand when price rises from $12 to $16?

Correct Answer
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The price elasticity of supply measures how much

Correct Answer
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For a particular good, a 10 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
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Refer to Table 5-9. Along which of the supply curves does quantity supplied move proportionately more than the price?

Correct Answer
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Figure 5-8 -Refer to Figure 5-8. When the price is $15, total revenue is

Correct Answer
verified

On a certain supply curve, one point is quantity supplied = 200, price = $4.00) and another point is quantity supplied = 250, price = $4.50) . Using the midpoint method, the price elasticity of supply is about

Correct Answer
verified

Studies indicate that the price elasticity of demand for cigarettes is about 0.4. A government policy aimed at reducing smoking changed the price of a pack of cigarettes from $2 to $6. According to the midpoint method, the government policy should have reduced smoking by

Correct Answer
verified

Table 5-7 The following table shows a portion of the demand schedule for a particular good at various levels of income. -Refer to Table 5-7. Using the midpoint method, at a price of $16, what is the income elasticity of demand when income rises from $5,000 to $10,000?

Correct Answer
verified

If the demand for textbooks is inelastic, then an increase in the price of textbooks will

Correct Answer
verified

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

Correct Answer
verified

Which of the following is an illustration of the market for original paintings by deceased artist Vincent Van Gogh?

Correct Answer
verified

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

Correct Answer
verified

Farm programs that pay farmers not to plant crops on all their land

Correct Answer
verified

If the quantity demanded of a certain good responds only slightly to a change in the price of the good, then the

Correct Answer
verified

With regard to elasticity, if a firm has a longer time to adjust to a price increase, supply will be more

Correct Answer
verified

Whether a good is a luxury or necessity depends on the

Correct Answer
verified

Recently, in Smalltown, the price of Twinkies fell from $0.80 to $0.70. As a result, the quantity demanded of Ho- Ho's decreased from 120 to 100. What would be the appropriate elasticity to compute? Using the midpoint method, compute this elasticity. What does your answer tell you?

Correct Answer
verified
The appropriate elasticity to compute wo...
View Answer

Exam 5: Elasticity and Its Application

Suppose a farmer knows that he will be able to harvest and sell 3,000 bushels of wheat. Would he prefer a market in which conditions are favorable and most farmers harvest large crops or a market in which conditions are unfavorable and many farmers harvest small crops? Why?

Correct AnswerverifiedThe farmer prefers a market in...View AnswerShow Answer

Correct AnswerverifiedShow Answer

The supply of oil is likely to be

Correct AnswerverifiedShow Answer

Table 5-4 The following table shows the demand schedule for a particular good. -Refer to Table 5-4. Using the midpoint method, what is the price elasticity of demand when price rises from $12 to $16?

Correct AnswerverifiedShow Answer

The price elasticity of supply measures how much

Correct AnswerverifiedShow Answer

For a particular good, a 10 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

Refer to Table 5-9. Along which of the supply curves does quantity supplied move proportionately more than the price?

Correct AnswerverifiedShow Answer

Figure 5-8 -Refer to Figure 5-8. When the price is $15, total revenue is

Correct AnswerverifiedShow Answer

On a certain supply curve, one point is quantity supplied = 200, price = $4.00) and another point is quantity supplied = 250, price = $4.50) . Using the midpoint method, the price elasticity of supply is about

Correct AnswerverifiedShow Answer

Studies indicate that the price elasticity of demand for cigarettes is about 0.4. A government policy aimed at reducing smoking changed the price of a pack of cigarettes from $2 to $6. According to the midpoint method, the government policy should have reduced smoking by

Correct AnswerverifiedShow Answer

Table 5-7 The following table shows a portion of the demand schedule for a particular good at various levels of income. -Refer to Table 5-7. Using the midpoint method, at a price of $16, what is the income elasticity of demand when income rises from $5,000 to $10,000?

Correct AnswerverifiedShow Answer

If the demand for textbooks is inelastic, then an increase in the price of textbooks will

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is an illustration of the market for original paintings by deceased artist Vincent Van Gogh?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Farm programs that pay farmers not to plant crops on all their land

Correct AnswerverifiedShow Answer

If the quantity demanded of a certain good responds only slightly to a change in the price of the good, then the

Correct AnswerverifiedShow Answer

With regard to elasticity, if a firm has a longer time to adjust to a price increase, supply will be more

Correct AnswerverifiedShow Answer

Whether a good is a luxury or necessity depends on the

Correct AnswerverifiedShow Answer

Recently, in Smalltown, the price of Twinkies fell from $0.80 to $0.70. As a result, the quantity demanded of Ho- Ho's decreased from 120 to 100. What would be the appropriate elasticity to compute? Using the midpoint method, compute this elasticity. What does your answer tell you?

Correct AnswerverifiedThe appropriate elasticity to compute wo...View AnswerShow Answer

Correct Answer
verified
The farmer prefers a market in...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The appropriate elasticity to compute wo...
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