Question 1

Figure 5-4 
-Refer to Figure 5-4.Assume the section of the demand curve from A to B corresponds to prices between $8 and $16.Then,when the price changes between $9 and $10,

Accepted Answer

A)   quantity demanded changes proportionately less than the price.
B)   quantity demanded changes proportionately more than the price.
C)   quantity demanded changes the same amount proportionately as price.
D)   the price elasticity of demand equals 1.E) A) and C)
F) A) and D)

Question 2

If a 25% change in price results in a 40% 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) B) and C)
F) None of the above

Question 3

If the price of calculators increases by 15 percent and the quantity demanded per week falls by 45 percent as a result,then the price elasticity of demand is 3.

Accepted Answer

A) True 
 B)False

Question 4

For a horizontal demand curve,

Accepted Answer

A)   the slope is undefined,and the price elasticity of demand is equal to 0.
B)   the slope is equal to 0,and the price elasticity of demand is undefined.
C)   both the slope and price elasticity of demand are undefined.
D)   both the slope and price elasticity of demand are equal to 0.E) B) and C)
F) All of the above

Question 5

Table 5-2
 
-Refer to Table 5-2.Using the midpoint method,if the price falls from $80 to $60,the price elasticity of demand is

Accepted Answer

A)   zero.
B)   unit elastic.
C)   inelastic.
D)   elastic.E) A) and B)
F) A) and C)

Question 6

Generally,a firm is more willing and able to increase quantity supplied in response to a price change when

Accepted Answer

A)   the relevant time period is short rather than long.
B)   the relevant time period is long rather than short.
C)   supply is inelastic.
D)   the firm is experiencing capacity problems.E) B) and D)
F) B) and C)

Question 7

You are in charge of the local city-owned aquatic center.You need to increase the revenue generated by the aquatic center in order to meet expenses.The mayor advises you to decrease the price of a day pass.The city manager recommends increasing the price of a day pass.You realize that

Accepted Answer

A)   the mayor thinks demand is elastic,and the city manager thinks demand is inelastic.
B)   both the mayor and the city manager think that demand is elastic.
C)   both the mayor and the city manager think that demand is inelastic.
D)   the mayor thinks demand is inelastic,and the city manager thinks demand is elastic.E) B) and C)
F) A) and B)

Question 8

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 C)
F) C) and D)

Question 9

Table 5-5
 
-Refer to Table 5-5.Along which of the supply curves does quantity supplied move proportionately more than the price?

Accepted Answer

A)   along supply curve B only
B)   along supply curves B and C
C)   along all three supply curves
D)   None.Quantity supplied moves proportionately less than the price along all of the three supply curves.E) A) and C)
F) A) and B)

Question 10

Table 5-6
 
-Refer to Table 5-6.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) B) and D)
F) A) and C)

Question 11

At a price of $1.00,a local coffee shop is willing to supply 100 cinnamon rolls per day.At a price of $1.20,the coffee shop would be willing to supply 150 cinnamon rolls per day.Using the midpoint method,the price elasticity of supply is about

Accepted Answer

A)   0.45
B)   0.90
C)   1.11
D)   2.20E) All of the above
F) None of the above

Question 12

A "Just Say No" drug education policy that successfully educates consumers to reduce their demand for drugs will lower drug prices and reduce the quantity of drugs demanded.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

There are very few,if any,good substitutes for automotive tires.Therefore,the demand for automotive tires would tend to be

Accepted Answer

A)   elastic.
B)   unit elastic.
C)   inelastic.
D)   highly responsive to changes in income as well as changes in prices.E) A) and B)
F) A) and C)

Question 15

Figure 5-5 
-Refer to Figure 5-5.Using the midpoint method,between prices of $48 and $54,price elasticity of demand is about

Accepted Answer

A)   0.92.
B)   3.89.
C)   4.33.
D)   5.67.E) A) and B)
F) All of the above

Question 16

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

Accepted Answer

A)   gasoline in the short run
B)   dentist's visits
C)   ice cream
D)   deodorantE) B) and C)
F) A) and D)

Question 17

If the price elasticity of demand for tuna is 0.7,then a 1.5% increase in the price of tuna will decrease the quantity demanded of tuna by

Accepted Answer

A)   1.05%,and tuna sellers' total revenue will increase as a result.
B)   1.05%,and tuna sellers' total revenue will decrease as a result.
C)   2.14%,and tuna sellers' total revenue will increase as a result.
D)   2.14%,and tuna sellers' total revenue will decrease as a result.E) B) and C)
F) A) and D)

Question 18

The demand for Godiva pumpkin truffles is likely quite elastic because

Accepted Answer

A)   truffles melt easily.
B)   this particular type of chocolate is viewed as a necessity by many chocolate lovers.
C)   the market is broadly defined.
D)   other types of chocolate are good substitutes for this particular flavor.E) None of the above
F) C) and D)

Question 19

The difference between slope and elasticity is that slope

Accepted Answer

A)   is a ratio of two changes,and elasticity is a ratio of two percentage changes.
B)   is a ratio of two percentage changes,and elasticity is a ratio of two changes.
C)   measures changes in quantity demanded more accurately than elasticity.
D)   none of the above;there is no difference between slope and elasticity.E) None of the above
F) C) and D)

Question 20

A key determinant of the price elasticity of supply is the

Accepted Answer

A)   time horizon.
B)   income of consumers.
C)   price elasticity of demand.
D)   importance of the good in a consumer's budget.E) None of the above
F) B) and C)

Exam 5: Elasticity and Its Application

Table 5-6 -Refer to Table 5-6.Using the midpoint method,what is the income elasticity of demand for good X?

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When consumers face rising gasoline prices,they typically

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Table 5-5 -Refer to Table 5-5.Along which of the supply curves does quantity supplied move proportionately more than the price?

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Figure 5-5 -Refer to Figure 5-5.Using the midpoint method,between prices of $48 and $54,price elasticity of demand is about

Correct AnswerverifiedShow Answer

You are in charge of the local city-owned aquatic center.You need to increase the revenue generated by the aquatic center in order to meet expenses.The mayor advises you to decrease the price of a day pass.The city manager recommends increasing the price of a day pass.You realize that

Correct AnswerverifiedShow Answer

The difference between slope and elasticity is that slope

Correct AnswerverifiedShow Answer

Figure 5-4 -Refer to Figure 5-4.Assume the section of the demand curve from A to B corresponds to prices between $8 and $16.Then,when the price changes between $9 and $10,

Correct AnswerverifiedShow Answer

There are very few,if any,good substitutes for automotive tires.Therefore,the demand for automotive tires would tend to be

Correct AnswerverifiedShow Answer

Generally,a firm is more willing and able to increase quantity supplied in response to a price change when

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the price elasticity of demand for tuna is 0.7,then a 1.5% increase in the price of tuna will decrease the quantity demanded of tuna by

Correct AnswerverifiedShow Answer

A key determinant of the price elasticity of supply is the

Correct AnswerverifiedShow Answer

A "Just Say No" drug education policy that successfully educates consumers to reduce their demand for drugs will lower drug prices and reduce the quantity of drugs demanded.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

At a price of $1.00,a local coffee shop is willing to supply 100 cinnamon rolls per day.At a price of $1.20,the coffee shop would be willing to supply 150 cinnamon rolls per day.Using the midpoint method,the price elasticity of supply is about

Correct AnswerverifiedShow Answer

The demand for Godiva pumpkin truffles is likely quite elastic because

Correct AnswerverifiedShow Answer

If the price of calculators increases by 15 percent and the quantity demanded per week falls by 45 percent as a result,then the price elasticity of demand is 3.

Correct AnswerverifiedShow Answer

For a horizontal demand curve,

Correct AnswerverifiedShow Answer

Table 5-2 -Refer to Table 5-2.Using the midpoint method,if the price falls from $80 to $60,the price elasticity of demand is

Correct AnswerverifiedShow Answer

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