Question 1

Suppose that 500 candy bars are demanded at a particular price.If the price of candy bars rises from that price by 10 percent,the number of candy bars demanded falls to 480.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 unit 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 0.41.
D)   price elasticity of demand for candy bars in this price range is about 0.24.E) C) and D)
F) All of the above

Question 2

Figure 5-15 
-Refer to Figure 5-15.Using the midpoint method,what is the price elasticity of supply between point A and point B?

Accepted Answer

A)   0.58
B)   0.71
C)   1.06
D)   1.4E) None of the above
F) B) and D)

Question 3

Elasticity is

Accepted Answer

A)   a measure of how much buyers and sellers respond to changes in market conditions.
B)   the study of how the allocation of resources affects economic well-being.
C)   the maximum amount that a buyer will pay for a good.
D)   the value of everything a seller must give up to produce a good.E) B) and C)
F) A) and D)

Question 4

You and your college roommate eat three packages of Ramen noodles each week.After graduation last month,both of you were hired at several times your college income.You still enjoy Ramen noodles very much and buy even more,but your roommate plans to buy fewer Ramen noodles in favor of foods she prefers more.When looking at income elasticity of demand for Ramen noodles,

Accepted Answer

A)   yours would be negative and your roommate's would be positive.
B)   yours would be positive and your roommate's would be negative.
C)   yours would be zero and your roommate's would approach infinity.
D)   yours would approach infinity and your roommate's would be zero.E) B) and C)
F) None of the above

Question 5

For a vertical demand curve,

Accepted Answer

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

Question 6

Other things equal,the demand for a good tends to be more inelastic,the

Accepted Answer

A)   fewer the available substitutes.
B)   longer the time period considered.
C)   more the good is considered a luxury good.
D)   more narrowly defined is the market for the good.E) A) and D)
F) B) and C)

Question 7

Holding all other forces constant,if increasing the price of a good leads to a decrease 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) All of the above
F) A) and B)

Question 8

Which of the following is not a determinant of the price elasticity of demand for a good?

Accepted Answer

A)   the time horizon
B)   the steepness or flatness of the supply curve for the good
C)   the definition of the market for the good
D)   the availability of substitutes for the goodE) B) and C)
F) A) and D)

Question 9

The income elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in income.

Accepted Answer

A) True 
 B)False

Question 10

The cross-price elasticity of demand can tell us whether goods are

Accepted Answer

A)   normal or inferior.
B)   elastic or inelastic.
C)   luxuries or necessities.
D)   complements or substitutes.E) None of the above
F) A) and D)

Question 11

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

Question 12

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

Question 13

The price elasticity of demand for eggs

Accepted Answer

A)   is computed as the percentage change in quantity demanded of eggs divided by the percentage change in price of eggs.
B)   will be lower if there is a new invention that is a close substitute for eggs.
C)   will be higher if consumers consider eggs to be a luxury good.
D)   All of the above are correct.E) All of the above
F) A) and B)

Question 14

If the demand curve is linear and downward sloping,which of the following statements is not correct?

Accepted Answer

A)   Demand is more elastic on the lower part of the demand curve than on the upper part.
B)   Different pairs of points on the demand curve can result in different values of the price elasticity of demand.
C)   Different pairs of points on the demand curve result in identical values of the slope of the demand curve.
D)   Starting from a point on the upper part of the demand curve,an increase in price leads to a decrease in total revenue.E) None of the above
F) All of the above

Question 15

Which of the following statements is not correct concerning government attempts to reduce the flow of illegal drugs into the country?

Accepted Answer

A)   Drug interdiction raises prices and total revenue in the drug market.
B)   Drug interdiction can increase drug-related crime.
C)   Drug interdiction shifts the demand curve for drugs to the left.
D)   Drug interdiction shifts the supply curve of drugs to the left.E) A) and B)
F) A) and C)

Question 16

When the price of a good is $5,the quantity demanded is 100 units per month;when the price is $7,the quantity demanded is 80 units per month.Using the midpoint method,the price elasticity of demand is about

Accepted Answer

A)   0.22.
B)   0.67.
C)   1.33.
D)   1.50.E) B) and C)
F) A) and C)

Question 17

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 18

How does the concept of elasticity allow us to improve upon our understanding of supply and demand?

Accepted Answer

A)   Elasticity allows us to analyze supply and demand with greater precision than would be the case in the absence of the elasticity concept.
B)   Elasticity provides us with a better rationale for statements such as "an increase in x will lead to a decrease in y" than we would have in the absence of the elasticity concept.
C)   Without elasticity,we would not be able to address the direction in which price is likely to move in response to a surplus or a shortage.
D)   Without elasticity,it is very difficult to assess the degree of competition within a market.E) A) and C)
F) None of the above

Question 19

The demand for Neapolitan ice cream is likely quite elastic because

Accepted Answer

A)   ice cream must be eaten quickly.
B)   this particular flavor of ice cream is viewed as a necessity by many ice-cream lovers.
C)   the market is broadly defined.
D)   other flavors of ice cream are good substitutes for this particular flavor.E) None of the above
F) B) and C)

Question 20

Figure 5-1 
-Refer to Figure 5-1.Atog says he would buy one cup of coffee per day regardless of the price.If this is true,then Atog's demand for coffee is represented by demand curve

Accepted Answer

A)   A.
B)   B.
C)   C.
D)   D.E) B) and C)
F) A) and B)

Exam 5: Elasticity and Its Application

Which of the following is not a determinant of the price elasticity of demand for a good?

Correct Answer
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Figure 5-15 -Refer to Figure 5-15.Using the midpoint method,what is the price elasticity of supply between point A and point B?

Correct Answer
verified

Other things equal,the demand for a good tends to be more inelastic,the

Correct Answer
verified

Figure 5-1 -Refer to Figure 5-1.Atog says he would buy one cup of coffee per day regardless of the price.If this is true,then Atog's demand for coffee is represented by demand curve

Correct Answer
verified

Correct Answer
verified

The income elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in income.

Correct Answer
verified

The price elasticity of demand for eggs

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

How does the concept of elasticity allow us to improve upon our understanding of supply and demand?

Correct Answer
verified

A key determinant of the price elasticity of supply is the

Correct Answer
verified

Elasticity is

Correct Answer
verified

For a vertical demand curve,

Correct Answer
verified

Suppose that 500 candy bars are demanded at a particular price.If the price of candy bars rises from that price by 10 percent,the number of candy bars demanded falls to 480.Using the midpoint approach to calculate the price elasticity of demand,it follows that the

Correct Answer
verified

The demand for Neapolitan ice cream is likely quite elastic because

Correct Answer
verified

When the price of a good is $5,the quantity demanded is 100 units per month;when the price is $7,the quantity demanded is 80 units per month.Using the midpoint method,the price elasticity of demand is about

Correct Answer
verified

If the demand curve is linear and downward sloping,which of the following statements is not correct?

Correct Answer
verified

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

The cross-price elasticity of demand can tell us whether goods are

Correct Answer
verified

Which of the following statements is not correct concerning government attempts to reduce the flow of illegal drugs into the country?

Correct Answer
verified

Exam 5: Elasticity and Its Application

Which of the following is not a determinant of the price elasticity of demand for a good?

Correct AnswerverifiedShow Answer

Figure 5-15 -Refer to Figure 5-15.Using the midpoint method,what is the price elasticity of supply between point A and point B?

Correct AnswerverifiedShow Answer

Other things equal,the demand for a good tends to be more inelastic,the

Correct AnswerverifiedShow Answer

Figure 5-1 -Refer to Figure 5-1.Atog says he would buy one cup of coffee per day regardless of the price.If this is true,then Atog's demand for coffee is represented by demand curve

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The income elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in income.

Correct AnswerverifiedShow Answer

The price elasticity of demand for eggs

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

How does the concept of elasticity allow us to improve upon our understanding of supply and demand?

Correct AnswerverifiedShow Answer

A key determinant of the price elasticity of supply is the

Correct AnswerverifiedShow Answer

Elasticity is

Correct AnswerverifiedShow Answer

For a vertical demand curve,

Correct AnswerverifiedShow Answer

Suppose that 500 candy bars are demanded at a particular price.If the price of candy bars rises from that price by 10 percent,the number of candy bars demanded falls to 480.Using the midpoint approach to calculate the price elasticity of demand,it follows that the

Correct AnswerverifiedShow Answer

The demand for Neapolitan ice cream is likely quite elastic because

Correct AnswerverifiedShow Answer

When the price of a good is $5,the quantity demanded is 100 units per month;when the price is $7,the quantity demanded is 80 units per month.Using the midpoint method,the price elasticity of demand is about

Correct AnswerverifiedShow Answer

If the demand curve is linear and downward sloping,which of the following statements is not correct?

Correct AnswerverifiedShow Answer

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

The cross-price elasticity of demand can tell us whether goods are

Correct AnswerverifiedShow Answer

Which of the following statements is not correct concerning government attempts to reduce the flow of illegal drugs into the country?

Correct AnswerverifiedShow Answer

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

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