Question 1

Suppose that 50 candy bars are demanded at a particular price.If the price of candy bars rises from that price by 5 percent,the number of candy bars demanded falls to 48.Using the midpoint approach to calculate the price elasticity of demand,it follows that the

Accepted Answer

A)  demand for candy bars in this price range is elastic.
B)  price increase will decrease the total revenue of candy bar sellers.
C)  price elasticity of demand for candy bars in this price range is about 1.22.
D)  price elasticity of demand for candy bars in this price range is about 0.82.E) B) and C)
F) None of the above

Question 2

The price elasticity of supply measures how responsive

Accepted Answer

A)  sellers are to a change in price.
B)  sellers are to a change in buyers' income.
C)  buyers are to a change in production costs.
D)  equilibrium price is to a change in supply.E) A) and B)
F) All of the above

Question 3

The income elasticity of demand for caviar tends to be

Accepted Answer

A)  high because caviar is relatively expensive.
B)  low because caviar is packaged in small containers.
C)  high because buyers generally feel that they can do without it.
D)  low because it is almost always in short supply.E) A) and B)
F) A) and C)

Question 4

The smaller the price elasticity of demand,the

Accepted Answer

A)  steeper the demand curve will be through a given point.
B)  flatter the demand curve will be through a given point.
C)  more strongly buyers respond to a change in price between any two prices P₁ and P₂.
D)  larger the decrease in equilibrium price when the supply curve shifts rightward from S₁ to S₂.E) A) and B)
F) A) and C)

Question 5

You have just been hired as a business consultant to determine what pricing policy would be appropriate in order to increase the total revenue of a major shoe store.The first step you would take would be to

Accepted Answer

A)  increase the price of every shoe in the store.
B)  look for ways to cut costs and increase profit for the store.
C)  determine the price elasticity of demand for the store's products.
D)  determine the price elasticity of supply for the store's products.E) A) and B)
F) C) and D)

Question 6

A person who takes a prescription drug to control high cholesterol most likely has a demand for that drug that is

Accepted Answer

A)  inelastic.
B)  unit elastic.
C)  elastic.
D)  highly responsive to changes in income.E) A) and B)
F) All of the above

Question 7

OPEC successfully raised the world price of oil in the 1970s and early 1980s,primarily due to

Accepted Answer

A)  an inelastic demand for oil and a reduction in the amount of oil supplied.
B)  a reduction in the amount of oil supplied and a world-wide oil embargo.
C)  a world-wide oil embargo and an elastic demand for oil.
D)  a reduction in the amount of oil supplied and an elastic demand for oil.E) A) and D)
F) All of the above

Question 8

Figure 5-5
 
-Refer to Figure 5-5.When price falls from $50 to $40,it can be inferred that demand between those two prices is

Accepted Answer

A)  inelastic, since total revenue decreases from $8,000 to $5,000.
B)  inelastic, since total revenue increases from $5,000 to $8,000.
C)  elastic, since total revenue increases from $5,000 to $8,000.
D)  unit elastic, since total revenue increases from $5,000 to $8,000.E) All of the above
F) B) and C)

Question 9

Using the midpoint method,compute the elasticity of demand between points A and B.Is demand along this portion of the curve elastic or inelastic? Interpret your answer with regard to price and quantity demanded.Now compute the elasticity of demand between points B and C.Is demand along this portion of the curve elastic or inelastic?

Accepted Answer

In the section of the demand curve from ...

Question 10

Cross-price elasticity of demand measures how

Accepted Answer

A)  the price of one good changes in response to a change in the price of another good.
B)  the quantity demanded of one good changes in response to a change in the quantity demanded of another good.
C)  the quantity demanded of one good changes in response to a change in the price of another good.
D)  strongly normal or inferior a good is.E) A) and C)
F) A) and B)

Question 11

Which of the following statements is valid when the market supply curve is vertical?

Accepted Answer

A)  Market quantity supplied does not change when the price changes.
B)  Supply is perfectly elastic.
C)  An increase in market demand will increase the equilibrium quantity.
D)  An increase in market demand will not increase the equilibrium price.E) A) and B)
F) A) and C)

Question 12

Which of the following expressions is valid for the price elasticity of demand?

Accepted Answer

A)  Price elasticity of demand = 
B)  Price elasticity of demand = 
C)  Price elasticity of demand = 
D)  Price elasticity of demand = E) A) and C)
F) None of the above

Question 13

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

Accepted Answer

A)  the supply of wheat is elastic.
B)  the supply of wheat is inelastic.
C)  the demand for wheat is inelastic.
D)  the demand for wheat is elastic.E) None of the above
F) All of the above

Question 14

Normal goods have negative income elasticities of demand,while inferior goods have positive income elasticities of demand.

Accepted Answer

A) True 
 B)False

Question 15

Suppose good X has a negative income elasticity of demand.This implies that good X is

Accepted Answer

A)  a normal good.
B)  a necessity.
C)  an inferior good.
D)  a luxury.E) All of the above
F) B) and C)

Question 16

It is likely that

Accepted Answer

A)  the demand for flat-screen computer monitors is more elastic than the demand for monitors in general.
B)  the demand for grandfather clocks is more elastic than the demand for wristwatches.
C)  the demand for cardboard is more elastic over a long period of time than over a short period of time.
D)  All of the above are correct.E) A) and B)
F) None of the above

Question 17

Which of the following statements is not valid when supply is perfectly elastic?

Accepted Answer

A)  The elasticity of supply approaches infinity.
B)  The supply curve is horizontal.
C)  Very small changes in price lead to large changes in quantity supplied.
D)  The time period under consideration is more likely a short period rather than a long period.E) A) and B)
F) B) and D)

Question 18

Figure 5-8. A demand curve is shown on the graph below. On the graph, Q represents quantity demanded and P represents price.
 
-Refer to Figure 5-8.The maximum value of total revenue corresponds to a price of

Accepted Answer

A)  $18.
B)  $30.
C)  $42.
D)  $48.E) A) and C)
F) A) and B)

Question 19

In the market for oil in the short run,demand

Accepted Answer

A)  and supply are both elastic.
B)  and supply are both inelastic.
C)  is elastic and supply is inelastic.
D)  is inelastic and supply is elastic.E) None of the above
F) A) and D)

Question 20

When a supply curve is relatively flat,

Accepted Answer

A)  sellers are not at all responsive to a change in price.
B)  the equilibrium price changes substantially when the demand for the good changes.
C)  the supply is relatively elastic.
D)  the supply is relatively inelastic.E) A) and C)
F) A) and B)

Exam 5: Elasticity and Its Applications

When a supply curve is relatively flat,

Correct Answer
verified

Figure 5-8. A demand curve is shown on the graph below. On the graph, Q represents quantity demanded and P represents price. -Refer to Figure 5-8.The maximum value of total revenue corresponds to a price of

Correct Answer
verified

A person who takes a prescription drug to control high cholesterol most likely has a demand for that drug that is

Correct Answer
verified

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

Correct Answer
verified

Normal goods have negative income elasticities of demand,while inferior goods have positive income elasticities of demand.

Correct Answer
verified

You have just been hired as a business consultant to determine what pricing policy would be appropriate in order to increase the total revenue of a major shoe store.The first step you would take would be to

Correct Answer
verified

The income elasticity of demand for caviar tends to be

Correct Answer
verified

It is likely that

Correct Answer
verified

Which of the following expressions is valid for the price elasticity of demand?

Correct Answer
verified

Suppose that 50 candy bars are demanded at a particular price.If the price of candy bars rises from that price by 5 percent,the number of candy bars demanded falls to 48.Using the midpoint approach to calculate the price elasticity of demand,it follows that the

Correct Answer
verified

Correct Answer
verified
In the section of the demand curve from ...
View Answer

Which of the following statements is valid when the market supply curve is vertical?

Correct Answer
verified

Suppose good X has a negative income elasticity of demand.This implies that good X is

Correct Answer
verified

Cross-price elasticity of demand measures how

Correct Answer
verified

OPEC successfully raised the world price of oil in the 1970s and early 1980s,primarily due to

Correct Answer
verified

The price elasticity of supply measures how responsive

Correct Answer
verified

In the market for oil in the short run,demand

Correct Answer
verified

The smaller the price elasticity of demand,the

Correct Answer
verified

Figure 5-5 -Refer to Figure 5-5.When price falls from $50 to $40,it can be inferred that demand between those two prices is

Correct Answer
verified

Which of the following statements is not valid when supply is perfectly elastic?

Correct Answer
verified

Exam 5: Elasticity and Its Applications

When a supply curve is relatively flat,

Correct AnswerverifiedShow Answer

Figure 5-8. A demand curve is shown on the graph below. On the graph, Q represents quantity demanded and P represents price. -Refer to Figure 5-8.The maximum value of total revenue corresponds to a price of

Correct AnswerverifiedShow Answer

A person who takes a prescription drug to control high cholesterol most likely has a demand for that drug that is

Correct AnswerverifiedShow 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

Correct AnswerverifiedShow Answer

Normal goods have negative income elasticities of demand,while inferior goods have positive income elasticities of demand.

Correct AnswerverifiedShow Answer

You have just been hired as a business consultant to determine what pricing policy would be appropriate in order to increase the total revenue of a major shoe store.The first step you would take would be to

Correct AnswerverifiedShow Answer

The income elasticity of demand for caviar tends to be

Correct AnswerverifiedShow Answer

It is likely that

Correct AnswerverifiedShow Answer

Which of the following expressions is valid for the price elasticity of demand?

Correct AnswerverifiedShow Answer

Suppose that 50 candy bars are demanded at a particular price.If the price of candy bars rises from that price by 5 percent,the number of candy bars demanded falls to 48.Using the midpoint approach to calculate the price elasticity of demand,it follows that the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedIn the section of the demand curve from ...View AnswerShow Answer

Which of the following statements is valid when the market supply curve is vertical?

Correct AnswerverifiedShow Answer

Suppose good X has a negative income elasticity of demand.This implies that good X is

Correct AnswerverifiedShow Answer

Cross-price elasticity of demand measures how

Correct AnswerverifiedShow Answer

OPEC successfully raised the world price of oil in the 1970s and early 1980s,primarily due to

Correct AnswerverifiedShow Answer

The price elasticity of supply measures how responsive

Correct AnswerverifiedShow Answer

In the market for oil in the short run,demand

Correct AnswerverifiedShow Answer

The smaller the price elasticity of demand,the

Correct AnswerverifiedShow Answer

Figure 5-5 -Refer to Figure 5-5.When price falls from $50 to $40,it can be inferred that demand between those two prices is

Correct AnswerverifiedShow Answer

Which of the following statements is not valid when supply is perfectly elastic?

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
In the section of the demand curve from ...
View 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