Question 1

Suppose a market has the demand function Qd=20-0.5P. At what price will total revenue be maximized?

Accepted Answer

The answer of Suppose a market has the demand function...

Question 2

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

Question 3

Scenario 5-4
The supply of aged cheddar cheese is inelastic, and the supply of bread is elastic. Both goods are considered to be normal goods by a majority of consumers. Suppose that a large income tax increase decreases the demand for both goods by 10%.
-Refer to Scenario 5-4. The change in equilibrium quantity will be

Accepted Answer

A)   greater in the aged cheddar cheese market than in the bread market.
B)   greater in the bread market than in the aged cheddar cheese market.
C)   the same in the aged cheddar cheese and bread markets.
D)   Any of the above could be correct.E) B) and D)
F) All of the above

Question 4

The price elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in price.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following statements is valid when supply is perfectly elastic at a price of $4?

Accepted Answer

A)   The elasticity of supply approaches infinity.
B)   The supply curve is vertical.
C)   At a price below $4, quantity supplied is infinite.
D)   At a price above $4, quantity supplied is zero.E) A) and B)
F) B) and C)

Question 6

You and your college roommate eat three packages of Ramen noodles each week. After graduation last month, both of you were hired at several times your college income. You still enjoy Ramen noodles very much and buy even more, but your roommate plans to buy fewer Ramen noodles in favor of foods she prefers more. When looking at income elasticity of demand for Ramen noodles, yours would

Accepted Answer

A)   be negative, and your roommate's would be positive.
B)   be positive, and your roommate's would be negative.
C)   be zero, and your roommate's would approach infinity.
D)   approach infinity, and your roommate's would be zero.E) C) and D)
F) B) and C)

Question 7

When the price of knee braces increased by 25 percent, the Brace Yourself Company increased its quantity supplied of knee braces per week by 75 percent. BYC's price elasticity of supply of knee braces is 0.33.

Accepted Answer

A) True 
 B)False

Question 8

The discovery of a new hybrid wheat would increase the supply of wheat. As a result, wheat farmers would realize an increase in total revenue if the

Accepted Answer

A)   supply of wheat is elastic.
B)   supply of wheat is inelastic.
C)   demand for wheat is inelastic.
D)   demand for wheat is elastic.E) A) and D)
F) A) and C)

Question 9

Table 5-1 
-Refer to Table 5-1. Which of the following is consistent with the elasticities given in Table 5-1?

Accepted Answer

A)   A is a luxury and B is a necessity.
B)   A is a good after an increase in income and B is that same good after a decrease in income.
C)   A has fewer substitutes than B.
D)   A is a good immediately after a price increase and B is that same good 3 years after the price increase.E) All of the above
F) B) and C)

Question 10

Suppose the price elasticity of supply for minivans is 0.3 in the short run and 1.2 in the long run. If an increase in the demand for minivans causes the price of minivans to increase by 5%, then the quantity supplied of minivans will increase by about

Accepted Answer

A)   1.5% in the short run and 6% in the long run.
B)   6% in the short run and 1.5% in the long run.
C)   16.7% in the short run and 4.2% in the long run.
D)   4.2% in the short run and 16.7% in the long run.E) C) and D)
F) A) and D)

Question 11

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

Question 12

Which of the following statements about the price elasticity of demand is correct?

Accepted Answer

A)   The price elasticity of demand for a good measures the willingness of buyers of the good to buy less of the good as its price increases.
B)   Price elasticity of demand reflects the many economic, psychological, and social forces that shape consumer tastes.
C)   Other things equal, if good x has close substitutes and good y does not have close substitutes, then the demand for good x will be more elastic than the demand for good y.
D)   All of the above are correct.E) B) and D)
F) None of the above

Question 13

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) A) and D)

Question 14

The production of methamphetamine (meth)  is a social problem in the Midwest. Iowa is considering two potential programs: Operation Methbust would increase the number of sheriffs' deputies to search out and destroy methamphetamine labs. Operation Say No to Meth would increase the training required of public school teachers so that they could better educate students about the health risks of using meth. Assuming that each program were successful, which of the following statements is correct?

Accepted Answer

A)   Both Operation Methbust and Say No would reduce the equilibrium quantity and increase the equilibrium price of meth.
B)   Both Operation Methbust and Say No would increase the equilibrium quantity and reduce the equilibrium price of meth.
C)   Both Operation Methbust and Say No would reduce the equilibrium quantity of meth; Operation Methbust would increase the equilibrium price, whereas Say No would reduce the equilibrium price of meth.
D)   Both Operation Methbust and Say No would reduce the equilibrium price of meth; Operation Methbust would reduce the equilibrium quantity, whereas Say No would increase the equilibrium quantity of meth.E) None of the above
F) C) and D)

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

In general, elasticity is a measure of

Accepted Answer

A)   the extent to which advances in technology are adopted by producers.
B)   the extent to which a market is competitive.
C)   how firms' profits respond to changes in market prices.
D)   how much buyers and sellers respond to changes in market conditions.E) B) and D)
F) All of the above

Question 17

If a 40% change in price results in a 25% change in quantity supplied, then the price elasticity of supply is about

Accepted Answer

A)   0.63, and supply is elastic.
B)   0.63, and supply is inelastic.
C)   1.60, and supply is elastic.
D)   1.60, and supply is inelastic.E) A) and D)
F) A) and C)

Question 18

Figure 5-15 
-Refer to Figure 5-15. Along which of these segments of the supply curve is supply least elastic?

Accepted Answer

A)   GH
B)   CD
C)   AC
D)   ABE) A) and B)
F) A) and C)

Question 19

A key determinant of the price elasticity of supply is the time period under consideration. Which of the following statements best explains this fact?

Accepted Answer

A)   Supply curves are steeper over long periods of time than over short periods of time.
B)   Buyers of goods tend to be more responsive to price changes over long periods of time than over short periods of time.
C)   The number of firms in a market tends to be more variable over long periods of time than over short periods of time.
D)   Firms prefer to change their prices in the short run rather than in the long run.E) All of the above
F) None of the above

Question 20

Figure 5-21 
-Refer to Figure 5-21. Using the midpoint method, what is the price elasticity of supply between $15 and $25?

Accepted Answer

The price ...

Exam 5: Elasticity and Its Application

Table 5-1 -Refer to Table 5-1. Which of the following is consistent with the elasticities given in Table 5-1?

Correct Answer
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Correct Answer
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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
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Figure 5-15 -Refer to Figure 5-15. Along which of these segments of the supply curve is supply least elastic?

Correct Answer
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A key determinant of the price elasticity of supply is the time period under consideration. Which of the following statements best explains this fact?

Correct Answer
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Which of the following statements is valid when supply is perfectly elastic at a price of $4?

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

Correct Answer
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Suppose a market has the demand function Qd=20-0.5P. At what price will total revenue be maximized?

Correct Answer
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Suppose the price elasticity of supply for minivans is 0.3 in the short run and 1.2 in the long run. If an increase in the demand for minivans causes the price of minivans to increase by 5%, then the quantity supplied of minivans will increase by about

Correct Answer
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Correct Answer
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Correct Answer
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Which of the following statements about the price elasticity of demand is correct?

Correct Answer
verified

If a 40% change in price results in a 25% change in quantity supplied, then the price elasticity of supply is about

Correct Answer
verified

The price elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in price.

Correct Answer
verified

When the price of knee braces increased by 25 percent, the Brace Yourself Company increased its quantity supplied of knee braces per week by 75 percent. BYC's price elasticity of supply of knee braces is 0.33.

Correct Answer
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In general, elasticity is a measure of

Correct Answer
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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
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Figure 5-21 -Refer to Figure 5-21. Using the midpoint method, what is the price elasticity of supply between $15 and $25?

Correct Answer
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The price ...
View Answer

The discovery of a new hybrid wheat would increase the supply of wheat. As a result, wheat farmers would realize an increase in total revenue if the

Correct Answer
verified

Correct Answer
verified

Exam 5: Elasticity and Its Application

Table 5-1 -Refer to Table 5-1. Which of the following is consistent with the elasticities given in Table 5-1?

Correct AnswerverifiedShow Answer

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

Figure 5-15 -Refer to Figure 5-15. Along which of these segments of the supply curve is supply least elastic?

Correct AnswerverifiedShow Answer

A key determinant of the price elasticity of supply is the time period under consideration. Which of the following statements best explains this fact?

Correct AnswerverifiedShow Answer

Which of the following statements is valid when supply is perfectly elastic at a price of $4?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose a market has the demand function Qd=20-0.5P. At what price will total revenue be maximized?

Correct AnswerverifiedShow Answer

Suppose the price elasticity of supply for minivans is 0.3 in the short run and 1.2 in the long run. If an increase in the demand for minivans causes the price of minivans to increase by 5%, then the quantity supplied of minivans will increase by about

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements about the price elasticity of demand is correct?

Correct AnswerverifiedShow Answer

If a 40% change in price results in a 25% change in quantity supplied, then the price elasticity of supply is about

Correct AnswerverifiedShow Answer

The price elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in price.

Correct AnswerverifiedShow Answer

When the price of knee braces increased by 25 percent, the Brace Yourself Company increased its quantity supplied of knee braces per week by 75 percent. BYC's price elasticity of supply of knee braces is 0.33.

Correct AnswerverifiedShow Answer

In general, elasticity is a measure of

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

Figure 5-21 -Refer to Figure 5-21. Using the midpoint method, what is the price elasticity of supply between $15 and $25?

Correct AnswerverifiedThe price ...View AnswerShow Answer

The discovery of a new hybrid wheat would increase the supply of wheat. As a result, wheat farmers would realize an increase in total revenue if the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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The price ...
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Correct Answer
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