Question 1

Cross-price elasticity of demand measures how the quantity demanded of one good changes as the price of another good changes.

Accepted Answer

A) True 
 B)False

Question 2

Table 5-10 
-Refer to Table 5-10. Using the midpoint method, which of the three supply curves has the most inelastic price elasticity of supply?

Accepted Answer

A)   Supply curve X
B)   Supply curve Y
C)   Supply curve Z
D)   There is no difference in the elasticities of the three supply curves.E) B) and C)
F) None of the above

Question 3

Total revenue

Accepted Answer

A)   always increases as price increases.
B)   increases as price increases, as long as demand is elastic.
C)   decreases as price increases, as long as demand is inelastic.
D)   remains unchanged as price increases when demand is unit elastic.E) B) and C)
F) A) and B)

Question 4

When studying how some event or policy affects a market, elasticity provides information on the

Accepted Answer

A)   change in the costs of production.
B)   tradeoff between equality and efficiency.
C)   effect on the budget deficit or surplus.
D)   direction and magnitude of the effect.E) All of the above
F) A) and D)

Question 5

Measures of elasticity enhance our ability to study the magnitudes of changes in quantities in response to changes in prices or income.

Accepted Answer

A) True 
 B)False

Question 6

Last year, Jim bought 8 tickets to sporting events when his income was $30,000. This year, his income is $33,000, and he purchased 10 tickets to sporting events. Holding other factors constant and using the midpoint method, it follows that Jim's income elasticity of demand is about

Accepted Answer

A)   0.43, and Jim regards tickets to sporting events as inferior goods.
B)   0.43, and Jim regards tickets to sporting events as normal goods.
C)   2.33, and Jim regards tickets to sporting events as inferior goods.
D)   2.33, and Jim regards tickets to sporting events as normal goods.E) A) and B)
F) B) and C)

Question 7

The measure of how willing consumers are to buy less of a good as its price rises is called

Accepted Answer

price elas...

Question 8

As we move downward and to the right along a linear, downward-sloping demand curve,

Accepted Answer

A)   both slope and elasticity remain constant.
B)   slope changes but elasticity remains constant.
C)   both slope and elasticity change.
D)   slope remains constant but elasticity changes.E) A) and B)
F) A) and C)

Question 9

If we observe that when the price of chocolate decreases by 10%, quantity demanded increases by 25%, then the demand for chocolate is price elastic.

Accepted Answer

A) True 
 B)False

Question 10

Demand for a good is said to be inelastic if the quantity demanded increases substantially when the price falls by a small amount.

Accepted Answer

A) True 
 B)False

Question 11

When consumers face rising gasoline prices, they typically

Accepted Answer

A)   reduce their quantity demanded more in the long run than in the short run.
B)   reduce their quantity demanded more in the short run than in the long run.
C)   do not reduce their quantity demanded in the short run or the long run.
D)   increase their quantity demanded in the short run but reduce their quantity demanded in the long run.E) B) and D)
F) B) and C)

Question 12

Demand is said to be price elastic if

Accepted Answer

A)   the price of the good responds substantially to changes in demand.
B)   demand shifts substantially when income or the expected future price of the good changes.
C)   buyers do not respond much to changes in the price of the good.
D)   buyers respond substantially to changes in the price of the good.E) A) and B)
F) A) and C)

Question 13

What is the price elasticity of demand at any point on a perfectly inelastic demand curve?

Accepted Answer

The price ...

Question 14

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 15

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 $12, what is the income elasticity of demand when income rises from $5,000 to $10,000?

Accepted Answer

A)   0.00
B)   0.41
C)   1.00
D)   2.45E) B) and C)
F) A) and C)

Question 16

Which of the following is not a determinant of the price elasticity of demand for a good?

Accepted Answer

A)   the time horizon
B)   the steepness or flatness of the supply curve for the good
C)   the definition of the market for the good
D)   the availability of substitutes for the goodE) B) and C)
F) C) and D)

Question 17

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 18

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

Accepted Answer

A) True 
 B)False

Question 19

Figure 5-4 
-Refer to Figure 5-4. Assume the section of the demand curve from A to B corresponds to prices between $6 and $12. Then, when the price increases from $8 to $10,

Accepted Answer

A)   the percent decrease in the quantity demanded exceeds the percent increase in the price.
B)   the percent increase in the price exceeds the percent decrease in the quantity demanded.
C)   sellers' total revenue increases as a result.
D)   it is possible that the quantity demanded fell from 550 to 500 as a result.E) C) and D)
F) A) and B)

Question 20

Refer to Table 5-12. Using the midpoint method, what is the price elasticity of demand between $2 and $4?

Accepted Answer

The price ...

Exam 5: Elasticity and Its Application

Measures of elasticity enhance our ability to study the magnitudes of changes in quantities in response to changes in prices or income.

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Total revenue

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When studying how some event or policy affects a market, elasticity provides information on the

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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 $12, what is the income elasticity of demand when income rises from $5,000 to $10,000?

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If we observe that when the price of chocolate decreases by 10%, quantity demanded increases by 25%, then the demand for chocolate is price elastic.

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Figure 5-4 -Refer to Figure 5-4. Assume the section of the demand curve from A to B corresponds to prices between $6 and $12. Then, when the price increases from $8 to $10,

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Which of the following is not a determinant of the price elasticity of demand for a good?

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Demand for a good is said to be inelastic if the quantity demanded increases substantially when the price falls by a small amount.

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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

The measure of how willing consumers are to buy less of a good as its price rises is called

Correct Answerverifiedprice elas...View AnswerShow Answer

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

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

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Demand is said to be price elastic if

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What is the price elasticity of demand at any point on a perfectly inelastic demand curve?

Correct AnswerverifiedThe price ...View AnswerShow Answer

Table 5-10 -Refer to Table 5-10. Using the midpoint method, which of the three supply curves has the most inelastic price elasticity of supply?

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Cross-price elasticity of demand measures how the quantity demanded of one good changes as the price of another good changes.

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As we move downward and to the right along a linear, downward-sloping demand curve,

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When consumers face rising gasoline prices, they typically

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Refer to Table 5-12. Using the midpoint method, what is the price elasticity of demand between $2 and $4?

Correct AnswerverifiedThe price ...View AnswerShow Answer

Last year, Jim bought 8 tickets to sporting events when his income was $30,000. This year, his income is $33,000, and he purchased 10 tickets to sporting events. Holding other factors constant and using the midpoint method, it follows that Jim's income elasticity of demand is about

Correct AnswerverifiedShow Answer

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The good i...
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price elas...
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The price ...
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The price ...
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