Question 1

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) All of the above
F) None of the above

Question 2

The demand for Godiva mint chocolates is likely quite elastic because

Accepted Answer

A)  there are many close substitutes.
B)  this particular type of chocolate is viewed as a luxury by many chocolate lovers.
C)  the market is narrowly defined.
D)  All of the above are correct.E) None of the above
F) B) and D)

Question 3

If the demand for textbooks is inelastic, then a decrease 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) B) and D)
F) A) and B)

Question 4

On a downward-sloping linear demand curve, total revenue reaches its maximum value at the

Accepted Answer

A)  midpoint of the demand curve.
B)  lower end of the demand curve.
C)  upper end of the demand curve.
D)  It is impossible to tell without knowing prices and quantities demanded.E) None of the above
F) All of the above

Question 5

Suppose demand is given by the equation:  Using the midpoint method, what is the price elasticity of demand between $1 and $2?

Accepted Answer

The price ...

Question 6

On a certain supply curve, one point is (quantity supplied = 200, price = $2.00)  and another point is (quantity supplied = 250, price = $2.50) . Using the midpoint method, the price elasticity of supply is about

Accepted Answer

A)  0.2.
B)  0.5.
C)  1.0.
D)  2.5.E) A) and D)
F) C) and D)

Question 7

If the price elasticity of supply is 0.4, and a price increase led to a 5% increase in quantity supplied, then the price increase is about

Accepted Answer

A)  0.25%.
B)  1.2%.
C)  2%.
D)  12.5%.E) A) and D)
F) B) and C)

Question 8

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) C) and D)
F) None of the above

Question 9

Which of the following is likely to have the most price inelastic demand?

Accepted Answer

A)  tablet computers
B)  leather boots
C)  lightbulbs
D)  optional textbooksE) A) and B)
F) None of the above

Question 10

Scenario 5-4
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 5-4. 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) C) and D)
F) None of the above

Question 11

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 because a price increase always leads to an increase in total revenue.E) A) and B)
F) A) and C)

Question 12

Figure 5-17 
-Refer to Figure 5-17. Using the midpoint method, what is the price elasticity of supply between point A and point B?

Accepted Answer

A)  0.4
B)  0.6
C)  1.67
D)  2.16E) A) and D)
F) A) and C)

Question 13

Figure 5-4 
-Refer to Figure 5-4. If the price decreases in the region of the demand curve between points A and B, we can expect total revenue to

Accepted Answer

A)  increase.
B)  stay the same.
C)  decrease.
D)  first decrease, then increase until total revenue is maximized.E) All of the above
F) B) and C)

Question 14

Which of the following was not a reason OPEC failed to keep the price of oil high?

Accepted Answer

A)  Over the long run, producers of oil outside of OPEC responded to higher prices by increasing oil exploration and by building new extraction capacity.
B)  Consumers responded to higher prices with greater conservation.
C)  Consumers replaced old inefficient cars with newer efficient ones.
D)  The agreement OPEC members signed allowed each country to produce as much oil as each wanted.E) None of the above
F) A) and B)

Question 15

A good will have a more elastic demand, the

Accepted Answer

A)  greater the availability of close substitutes.
B)  more broad the definition of the market.
C)  shorter the period of time.
D)  more it is regarded as a necessity.E) B) and C)
F) All of the above

Question 16

As price elasticity of supply increases, the supply curve

Accepted Answer

A)  becomes flatter.
B)  becomes steeper.
C)  becomes downward sloping.
D)  shifts to the right.E) None of the above
F) A) and C)

Question 17

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

Question 18

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

Accepted Answer

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

Question 19

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

Question 20

Suppose that quantity demand falls by 30% as a result of a 5% increase in price. The price elasticity of demand for this good is

Accepted Answer

A)  inelastic and equal to 6.
B)  elastic and equal to 6.
C)  inelastic and equal to 0.17.
D)  elastic and equal to 0.17.E) A) and C)
F) A) and B)

Exam 5: Elasticity and Its Application

Scenario 5-4 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 5-4. The equilibrium price will

Correct AnswerverifiedShow Answer

On a downward-sloping linear demand curve, total revenue reaches its maximum value at the

Correct AnswerverifiedShow Answer

When consumers face rising gasoline prices, they typically

Correct AnswerverifiedShow Answer

Figure 5-17 -Refer to Figure 5-17. Using the midpoint method, what is the price elasticity of supply between point A and point B?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the price elasticity of supply is 0.4, and a price increase led to a 5% increase in quantity supplied, then the price increase is about

Correct AnswerverifiedShow Answer

The demand for Godiva mint chocolates is likely quite elastic because

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

Which of the following was not a reason OPEC failed to keep the price of oil high?

Correct AnswerverifiedShow Answer

Which of the following is likely to have the most price inelastic demand?

Correct AnswerverifiedShow Answer

Suppose that quantity demand falls by 30% as a result of a 5% increase in price. The price elasticity of demand for this good is

Correct AnswerverifiedShow Answer

As price elasticity of supply increases, the supply curve

Correct AnswerverifiedShow Answer

Figure 5-4 -Refer to Figure 5-4. If the price decreases in the region of the demand curve between points A and B, we can expect total revenue to

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

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

Correct AnswerverifiedShow Answer

On a certain supply curve, one point is (quantity supplied = 200, price = $2.00) and another point is (quantity supplied = 250, price = $2.50) . Using the midpoint method, the price elasticity of supply is about

Correct AnswerverifiedShow Answer

The price elasticity of supply measures how responsive

Correct AnswerverifiedShow Answer

Suppose demand is given by the equation: Using the midpoint method, what is the price elasticity of demand between $1 and $2?

Correct AnswerverifiedThe price ...View AnswerShow Answer

A good will have a more elastic demand, the

Correct AnswerverifiedShow Answer

If the demand for textbooks is inelastic, then a decrease in the price of textbooks will

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The price ...
View Answer

Correct Answer
verified

Correct Answer
verified