Question 1

Fiona's Fish Emporium increased its total monthly revenue from $1,500 to $1,800 when it raised the price of tropical fish from $5 to $9. The price elasticity of demand for Fiona's Fish Emporium is

Accepted Answer

A)  0.57.
B)  0.70.
C)  1.43.
D)  2.20.E) All of the above
F) A) and B)

Question 2

Figure 5-4 
-Refer to Figure 5-4. If the price increases 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 increase, then decrease until total revenue is maximized.E) A) and D)
F) All of the above

Question 3

Which of the following could be the price elasticity of demand for a good for which a decrease in price would decrease revenue?

Accepted Answer

A)  0.5
B)  1
C)  1.5
D)  All of the above could be correct.E) A) and B)
F) A) and C)

Question 4

At price of $1.20, a local pencil manufacturer is willing to supply 150 boxes per day. At a price of $1.40, the manufacturer is willing to supply 170 boxes per day. Using the midpoint method, the price elasticity of supply is about

Accepted Answer

A)  2.0.
B)  1.23.
C)  1.00.
D)  0.81.E) A) and B)
F) A) and C)

Question 5

Elasticity of demand is closely related to the slope of the demand curve. The more responsive buyers are to a change in price, the

Accepted Answer

A)  steeper the demand curve will be.
B)  flatter the demand curve will be.
C)  further to the right the demand curve will sit.
D)  closer to the vertical axis the demand curve will sit.E) None of the above
F) All of the above

Question 6

Figure 5-5 
-Refer to Figure 5-5. Using the midpoint method, 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) All of the above
F) A) and B)

Question 7

The demand for bread is likely to be more elastic than the demand for solid-gold bread plates.

Accepted Answer

A) True 
 B)False

Question 8

Holding all other forces constant, when the price of gasoline rises, the number of gallons of gasoline demanded would fall substantially over a ten-year period because

Accepted Answer

A)  buyers tend to be much less sensitive to a change in price when given more time to react.
B)  buyers tend to be much more sensitive to a change in price when given more time to react.
C)  buyers will have substantially more real income over a ten-year period.
D)  the quantity supplied of gasoline increases very little in response to an increase in the price of gasoline.E) C) and D)
F) B) and D)

Question 9

If the price elasticity of supply is zero, then

Accepted Answer

A)  supply is more elastic than it is in any other case.
B)  the supply curve is horizontal.
C)  the quantity supplied is the same, regardless of price.
D)  a change in demand will cause a relatively small change in the equilibrium price.E) A) and C)
F) C) and D)

Question 10

In which of the following situations will total revenue increase?

Accepted Answer

A)  Price elasticity of demand is 1.2, and the price of the good decreases.
B)  Price elasticity of demand is 0.5, and the price of the good increases.
C)  Price elasticity of demand is 3.0, and the price of the good decreases.
D)  All of the above are correct.E) A) and D)
F) None of the above

Question 11

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 C)
F) A) and B)

Question 12

Which of the following could be the price elasticity of demand for a good for which a decrease in price would increase revenue?

Accepted Answer

A)  0
B)  0.2
C)  1
D)  2.1E) All of the above
F) B) and D)

Question 13

Figure 5-3 
-Refer to Figure 5-3. Mark says he would buy one Mt. Dew per day regardless of the price. If this is true, then Mark's demand for Mt. Dew is represented by demand curve

Accepted Answer

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

Question 14

Figure 5-17 
-Refer to Figure 5-17. Which of the following statements is correct?

Accepted Answer

A)  Supply curve A is perfectly elastic.
B)  Supply curve B is perfectly inelastic.
C)  Supply curve C is more inelastic than supply curve D.
D)  Supply curve D is unit elastic.E) A) and C)
F) A) and B)

Question 15

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

Question 16

Charles purchases 20 basketball tickets per year when his annual income is $50,000 and 25 basketball tickets when his annual income is $60,000. Charles's income elasticity of demand for basketball ticket is

Accepted Answer

A)  0.82, and basketball tickets are a normal good.
B)  0.82, and basketball tickets are an inferior good.
C)  1.22, and basketball tickets are a normal good.
D)  1.22, and basketball tickets are an inferior good.E) B) and C)
F) A) and D)

Question 17

Moving downward and to the right along a linear demand curve, we know that total revenue

Accepted Answer

A)  first increases, then decreases.
B)  first decreases, then increases.
C)  always increases.
D)  always decreases.E) B) and C)
F) A) and B)

Question 18

Scenario 5-2
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 5-2. The equilibrium quantity will

Accepted Answer

A)  increase in both the aged cheddar cheese and bread markets.
B)  increase in the aged cheddar cheese market and decrease in the bread market.
C)  decrease in the aged cheddar cheese market and increase in the bread market.
D)  decrease in both the aged cheddar cheese and bread markets.E) C) and D)
F) B) and D)

Question 19

Danita rescues dogs from her local animal shelter. When Danita's income rises by 7 percent, her quantity demanded of dog biscuits increases by 12 percent. For Danita, the income elasticity of demand for dog biscuits is

Accepted Answer

A)  negative, and dog biscuits are a normal good.
B)  negative, and dog biscuits are an inferior good.
C)  positive, and dog biscuits are an inferior good.
D)  positive, and dog biscuits are a normal good.E) B) and D)
F) A) and D)

Question 20

As the price elasticity of supply approaches infinity, very small changes in price lead to

Accepted Answer

A)  very large changes in quantity supplied.
B)  very small changes in quantity supplied.
C)  no change in quantity supplied.
D)  None of the above is correct.E) C) and D)
F) A) and B)

Exam 5: Elasticity and Its Application

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

Correct Answer
verified

Moving downward and to the right along a linear demand curve, we know that total revenue

Correct Answer
verified

Which of the following could be the price elasticity of demand for a good for which a decrease in price would decrease revenue?

Correct Answer
verified

Holding all other forces constant, when the price of gasoline rises, the number of gallons of gasoline demanded would fall substantially over a ten-year period because

Correct Answer
verified

If the price elasticity of supply is zero, then

Correct Answer
verified

As the price elasticity of supply approaches infinity, very small changes in price lead to

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 the

Correct Answer
verified

Which of the following could be the price elasticity of demand for a good for which a decrease in price would increase revenue?

Correct Answer
verified

Figure 5-3 -Refer to Figure 5-3. Mark says he would buy one Mt. Dew per day regardless of the price. If this is true, then Mark's demand for Mt. Dew is represented by demand curve

Correct Answer
verified

Figure 5-5 -Refer to Figure 5-5. Using the midpoint method, demand is unit elastic between prices of

Correct Answer
verified

At price of $1.20, a local pencil manufacturer is willing to supply 150 boxes per day. At a price of $1.40, the manufacturer is willing to supply 170 boxes per day. Using the midpoint method, the price elasticity of supply is about

Correct Answer
verified

In which of the following situations will total revenue increase?

Correct Answer
verified

Charles purchases 20 basketball tickets per year when his annual income is $50,000 and 25 basketball tickets when his annual income is $60,000. Charles's income elasticity of demand for basketball ticket is

Correct Answer
verified

Fiona's Fish Emporium increased its total monthly revenue from $1,500 to $1,800 when it raised the price of tropical fish from $5 to $9. The price elasticity of demand for Fiona's Fish Emporium is

Correct Answer
verified

Elasticity of demand is closely related to the slope of the demand curve. The more responsive buyers are to a change in price, the

Correct Answer
verified

Danita rescues dogs from her local animal shelter. When Danita's income rises by 7 percent, her quantity demanded of dog biscuits increases by 12 percent. For Danita, the income elasticity of demand for dog biscuits is

Correct Answer
verified

Figure 5-17 -Refer to Figure 5-17. Which of the following statements is correct?

Correct Answer
verified

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

Correct Answer
verified

The demand for bread is likely to be more elastic than the demand for solid-gold bread plates.

Correct Answer
verified

Correct Answer
verified

Exam 5: Elasticity and Its Application

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

Correct AnswerverifiedShow Answer

Moving downward and to the right along a linear demand curve, we know that total revenue

Correct AnswerverifiedShow Answer

Which of the following could be the price elasticity of demand for a good for which a decrease in price would decrease revenue?

Correct AnswerverifiedShow Answer

Holding all other forces constant, when the price of gasoline rises, the number of gallons of gasoline demanded would fall substantially over a ten-year period because

Correct AnswerverifiedShow Answer

If the price elasticity of supply is zero, then

Correct AnswerverifiedShow Answer

As the price elasticity of supply approaches infinity, very small changes in price lead to

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 the

Correct AnswerverifiedShow Answer

Which of the following could be the price elasticity of demand for a good for which a decrease in price would increase revenue?

Correct AnswerverifiedShow Answer

Figure 5-3 -Refer to Figure 5-3. Mark says he would buy one Mt. Dew per day regardless of the price. If this is true, then Mark's demand for Mt. Dew is represented by demand curve

Correct AnswerverifiedShow Answer

Figure 5-5 -Refer to Figure 5-5. Using the midpoint method, demand is unit elastic between prices of

Correct AnswerverifiedShow Answer

At price of $1.20, a local pencil manufacturer is willing to supply 150 boxes per day. At a price of $1.40, the manufacturer is willing to supply 170 boxes per day. Using the midpoint method, the price elasticity of supply is about

Correct AnswerverifiedShow Answer

In which of the following situations will total revenue increase?

Correct AnswerverifiedShow Answer

Charles purchases 20 basketball tickets per year when his annual income is $50,000 and 25 basketball tickets when his annual income is $60,000. Charles's income elasticity of demand for basketball ticket is

Correct AnswerverifiedShow Answer

Fiona's Fish Emporium increased its total monthly revenue from $1,500 to $1,800 when it raised the price of tropical fish from $5 to $9. The price elasticity of demand for Fiona's Fish Emporium is

Correct AnswerverifiedShow Answer

Elasticity of demand is closely related to the slope of the demand curve. The more responsive buyers are to a change in price, the

Correct AnswerverifiedShow Answer

Danita rescues dogs from her local animal shelter. When Danita's income rises by 7 percent, her quantity demanded of dog biscuits increases by 12 percent. For Danita, the income elasticity of demand for dog biscuits is

Correct AnswerverifiedShow Answer

Figure 5-17 -Refer to Figure 5-17. Which of the following statements is correct?

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

The demand for bread is likely to be more elastic than the demand for solid-gold bread plates.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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