Question 1

Table 5-1
 
-If a 6% decrease in price for a good results in a 2% increase in quantity demanded,the price elasticity of demand is

Accepted Answer

A)   0.02.
B)   0.33.
C)   3
D)   4.E) A) and B)
F) C) and D)

Question 2

Figure 5-9 1 and P2,and the corresponding quantities demanded,Q1 and Q2,for the purpose of calculating the price elasticity of demand.Also suppose P2 > P1.In which of the following cases could we possibly find that (i) demand is elastic and (ii) an increase in price from P1 to P2 causes an increase in total revenue? A)  0 1 2 1 2 1 > $15. D)  None of the above is correct." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 5-9.Suppose this demand curve is a straight,downward-sloping line all the way from the horizontal intercept to the vertical intercept.We choose two prices,P1 and P2,and the corresponding quantities demanded,Q1 and Q2,for the purpose of calculating the price elasticity of demand.Also suppose P2 > P1.In which of the following cases could we possibly find that (i) demand is elastic and (ii) an increase in price from P1 to P2 causes an increase in total revenue?

Accepted Answer

A)   0 1 2 
B)   $10 1 2 
C)   P1 > $15.
D)   None of the above is correct.E) A) and B)
F) B) and C)

Question 3

Table 5-3
The following table shows the demand schedule for a particular good.
 
-Refer to Table 5-3.Using the midpoint method,when price falls from $6 to $3,the price elasticity of demand is

Accepted Answer

A)   0.43
B)   0.67
C)   1.50
D)   2.33E) A) and D)
F) A) and C)

Question 4

Suppose the point (Q = 2,000,P = $60) is the midpoint on a certain downward-sloping,linear demand curve.Then

Accepted Answer

A)   an increase in price from $40 to $42 will increase total revenue.
B)   a decrease in price from $61 to $59 will leave total revenue unchanged.
C)   the maximum value of total revenue is $120,000.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 5

A linear,downward-sloping demand curve has a constant elasticity but a changing slope.

Accepted Answer

A) True 
 B)False

Question 6

Figure 5-5 
-Refer to Figure 5-5.Demand is unit elastic between prices of

Accepted Answer

A)   $18 and $24.
B)   $24 and $30.
C)   $24 and $36.
D)   $30 and $36.E) A) and D)
F) None of the above

Question 7

If demand is price inelastic,then

Accepted Answer

A)   buyers do not respond much to a change in price.
B)   buyers respond substantially to a change in price,but the response is very slow.
C)   buyers do not alter their quantities demanded much in response to advertising,fads,or general changes in tastes.
D)   the demand curve is very flat.E) A) and B)
F) A) and C)

Question 8

Table 5-5
 
-Refer to Table 5-5.Using the midpoint method,the income elasticity of demand for good Y is

Accepted Answer

A)   2.33,and good Y is a normal good.
B)   -2.33,and good Y is an inferior good.
C)   -0.43,and good Y is a normal good.
D)   -0.43,and good Y is an inferior good.E) B) and D)
F) None of the above

Question 9

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

Question 10

The flatter the demand curve through a given point,the

Accepted Answer

A)   greater the price elasticity of demand at that point.
B)   smaller the price elasticity of demand at that point.
C)   closer the price elasticity of demand will be to the slope of the curve.
D)   greater the absolute value of the change in total revenue when there is a movement from that point upward and to the left along the demand curve.E) C) and D)
F) A) and C)

Question 11

Suppose that when the price of beer is $2 per bottle,firms can sell 4 million bottles.When the price of beer is $3 per bottle,firms can sell 2 million bottles.Which of the following statements is true?

Accepted Answer

A)   The demand for beer is income inelastic,and so an increase in the price of beer will increase the total revenue of beer producers.
B)   The demand for beer is income elastic,and so an increase in the price of beer will increase the total revenue of beer producers.
C)   The demand for beer is price inelastic,and so an increase in the price of beer will increase the total revenue of beer producers.
D)   The demand for beer is price elastic,and so an increase in the price of beer will increase the total revenue of beer producers.E) A) and B)
F) C) and D)

Question 12

Table 5-2
The following table shows a portion of the demand schedule for a particular good at various levels of income.
 
-Refer to Table 5-2.Using the midpoint method,at a price of $8,what is the income elasticity of demand when income rises from $7,500 to $10,000?

Accepted Answer

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

Question 13

Holding all other forces constant,if increasing the price of a good leads to an increase in total revenue,then the demand for the good must be

Accepted Answer

A)   unit elastic.
B)   inelastic.
C)   elastic.
D)   None of the above is correct,since a price increase always leads to an increase in total revenue.E) None of the above
F) B) and D)

Question 14

Table 5-5
 
-Refer to Table 5-5.Using the midpoint method,what is the income elasticity of demand for good X?

Accepted Answer

A)   -3.5
B)   -0.29
C)   0.29
D)   3.5E) All of the above
F) A) and B)

Question 15

A perfectly inelastic demand implies that buyers

Accepted Answer

A)   decrease their purchases when the price rises.
B)   purchase the same amount as before when the price rises or falls.
C)   increase their purchases only slightly when the price falls.
D)   respond substantially to an increase in price.E) B) and C)
F) All of the above

Question 16

Figure 5-13 
-Refer to Figure 5-13.Along which of these segments of the supply curve is supply least elastic?

Accepted Answer

A)   between G and H
B)   between C and D
C)   between A and C
D)   between A and BE) None of the above
F) C) and D)

Question 17

When the local used bookstore prices economics books at $15.00 each,it generally sells 70 books per month.If it lowers the price to $7.00,sales increase to 90 books per month.Given this information,we know that the price elasticity of demand for economics books is about

Accepted Answer

A)   2.91,and an increase in price from $7.00 to $15.00 results in an increase in total revenue.
B)   2.91,and an increase in price from $7.00 to $15.00 results in a decrease in total revenue.
C)   0.34,and an increase in price from $7.00 to $15.00 results in an increase in total revenue.
D)   0.34,and an increase in price from $7.00 to $15.00 results in a decrease in total revenue.E) A) and B)
F) A) and C)

Question 18

Figure 5-10 1 is represented by the area(s)  A)  B + D. B)  A + B. C)  C + D. D)  D." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 5-10.Total revenue when the price is P1 is represented by the area(s)

Accepted Answer

A)   B + D.
B)   A + B.
C)   C + D.
D)   D.E) A) and D)
F) None of the above

Question 19

A good will have a more elastic demand,

Accepted Answer

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

Question 20

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

Exam 5: Elasticity and Its Application

A perfectly inelastic demand implies that buyers

Correct Answer
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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.

Correct Answer
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Table 5-2 The following table shows a portion of the demand schedule for a particular good at various levels of income. -Refer to Table 5-2.Using the midpoint method,at a price of $8,what is the income elasticity of demand when income rises from $7,500 to $10,000?

Correct Answer
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Figure 5-10 -Refer to Figure 5-10.Total revenue when the price is P₁ is represented by the area(s)

Correct Answer
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The price elasticity of supply measures how much

Correct Answer
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If demand is price inelastic,then

Correct Answer
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Figure 5-5 -Refer to Figure 5-5.Demand is unit elastic between prices of

Correct Answer
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Table 5-1 -If a 6% decrease in price for a good results in a 2% increase in quantity demanded,the price elasticity of demand is

Correct Answer
verified

The flatter the demand curve through a given point,the

Correct Answer
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Correct Answer
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Suppose the point (Q = 2,000,P = $60) is the midpoint on a certain downward-sloping,linear demand curve.Then

Correct Answer
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Suppose that when the price of beer is $2 per bottle,firms can sell 4 million bottles.When the price of beer is $3 per bottle,firms can sell 2 million bottles.Which of the following statements is true?

Correct Answer
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Table 5-3 The following table shows the demand schedule for a particular good. -Refer to Table 5-3.Using the midpoint method,when price falls from $6 to $3,the price elasticity of demand is

Correct Answer
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Figure 5-13 -Refer to Figure 5-13.Along which of these segments of the supply curve is supply least elastic?

Correct Answer
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When the local used bookstore prices economics books at $15.00 each,it generally sells 70 books per month.If it lowers the price to $7.00,sales increase to 90 books per month.Given this information,we know that the price elasticity of demand for economics books is about

Correct Answer
verified

A linear,downward-sloping demand curve has a constant elasticity but a changing slope.

Correct Answer
verified

Holding all other forces constant,if increasing the price of a good leads to an increase in total revenue,then the demand for the good must be

Correct Answer
verified

A good will have a more elastic demand,

Correct Answer
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Table 5-5 -Refer to Table 5-5.Using the midpoint method,what is the income elasticity of demand for good X?

Correct Answer
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Table 5-5 -Refer to Table 5-5.Using the midpoint method,the income elasticity of demand for good Y is

Correct Answer
verified

Exam 5: Elasticity and Its Application

A perfectly inelastic demand implies that buyers

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Table 5-2 The following table shows a portion of the demand schedule for a particular good at various levels of income. -Refer to Table 5-2.Using the midpoint method,at a price of $8,what is the income elasticity of demand when income rises from $7,500 to $10,000?

Correct AnswerverifiedShow Answer

Figure 5-10 -Refer to Figure 5-10.Total revenue when the price is P1 is represented by the area(s)

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The price elasticity of supply measures how much

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If demand is price inelastic,then

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Figure 5-5 -Refer to Figure 5-5.Demand is unit elastic between prices of

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Table 5-1 -If a 6% decrease in price for a good results in a 2% increase in quantity demanded,the price elasticity of demand is

Correct AnswerverifiedShow Answer

The flatter the demand curve through a given point,the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose the point (Q = 2,000,P = $60) is the midpoint on a certain downward-sloping,linear demand curve.Then

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Suppose that when the price of beer is $2 per bottle,firms can sell 4 million bottles.When the price of beer is $3 per bottle,firms can sell 2 million bottles.Which of the following statements is true?

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Table 5-3 The following table shows the demand schedule for a particular good. -Refer to Table 5-3.Using the midpoint method,when price falls from $6 to $3,the price elasticity of demand is

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Figure 5-13 -Refer to Figure 5-13.Along which of these segments of the supply curve is supply least elastic?

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When the local used bookstore prices economics books at $15.00 each,it generally sells 70 books per month.If it lowers the price to $7.00,sales increase to 90 books per month.Given this information,we know that the price elasticity of demand for economics books is about

Correct AnswerverifiedShow Answer

A linear,downward-sloping demand curve has a constant elasticity but a changing slope.

Correct AnswerverifiedShow Answer

Holding all other forces constant,if increasing the price of a good leads to an increase in total revenue,then the demand for the good must be

Correct AnswerverifiedShow Answer

A good will have a more elastic demand,

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Table 5-5 -Refer to Table 5-5.Using the midpoint method,what is the income elasticity of demand for good X?

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Table 5-5 -Refer to Table 5-5.Using the midpoint method,the income elasticity of demand for good Y is

Correct AnswerverifiedShow Answer

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Figure 5-10 -Refer to Figure 5-10.Total revenue when the price is P₁ is represented by the area(s)

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