Question 1

If the price of milk rises,when is the price elasticity of demand likely to be the lowest?

Accepted Answer

A)   immediately after the price increase
B)   one month after the price increase
C)   three months after the price increase
D)   one year after the price increaseE) A) and C)
F) None of the above

Question 2

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

Question 3

Figure 5-1
 
-Refer to Figure 5-1.Between point A and point B on the graph,demand is

Accepted Answer

A)   perfectly elastic.
B)   inelastic.
C)   unit elastic.
D)   elastic, but not perfectly elastic.E) A) and B)
F) A) and C)

Question 4

Figure 5-11
 
-Refer to Figure 5-11.If the price rises from point D to point C,total revenue

Accepted Answer

A)   increases, and demand is price elastic.
B)   decreases, and demand is price elastic.
C)   increases, and demand is price inelastic.
D)   decreases, and demand is price inelastic.E) A) and B)
F) A) and C)

Question 5

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) A) and C)

Question 6

The OPEC oil cartel has difficulty maintaining high prices in the long run because the supply of oil is more inelastic in the long run than in the short run.

Accepted Answer

A) True 
 B)False

Question 7

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 D)
F) B) and C)

Question 8

The price elasticity of supply measures how much

Accepted Answer

A)   the quantity supplied responds to changes in input prices.
B)   the quantity supplied responds to changes in the price of the good.
C)   the price of the good responds to changes in supply.
D)   sellers respond to changes in technology.E) B) and D)
F) A) and D)

Question 9

The supply of oil is likely to be

Accepted Answer

A)   inelastic in both the short run and long run.
B)   elastic in both the short run and long run.
C)   elastic in the short run and inelastic in the long run.
D)   inelastic in the short run and elastic in the long run.E) A) and C)
F) C) and D)

Question 10

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) B) and C)
F) B) and D)

Question 11

If the price elasticity of supply is 0.8,and price increased by 5%,quantity supplied would

Accepted Answer

A)   increase by 4%.
B)   increase by 6.25%.
C)   decrease by 4%.
D)   decrease by 6.25%.E) B) and C)
F) A) and C)

Question 12

If the price elasticity of supply is 1.2,and price increased by 5%,quantity supplied would

Accepted Answer

A)   increase by 4.2%.
B)   increase by 6%.
C)   decrease by 4.2%.
D)   decrease by 6%.E) B) and D)
F) All of the above

Question 13

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

Accepted Answer

A)   2.33, and good Y is a normal good.
B)   -2.33, and good Y is an inferior good.
C)   -0.43, and good Y is a normal good.
D)   -0.43, and good Y is an inferior good.E) A) and C)
F) None of the above

Question 14

Table 5-2
 
-Refer to Table 5-2.Using the midpoint method,if the price falls from $40 to $20,the absolute value of the price elasticity of demand is

Accepted Answer

A)   20.
B)   10.
C)   2.33.
D)   0.43.E) A) and B)
F) A) and C)

Question 15

Price elasticity of demand along a linear,downward-sloping demand curve increases as price falls.

Accepted Answer

A) True 
 B)False

Question 16

Suppose that two supply curves pass through the same point.One is steep,and the other is flat.Which of the following statements is correct?

Accepted Answer

A)   The flatter supply curve represents a supply that is inelastic relative to the supply represented by the steeper supply curve.
B)   The steeper supply curve represents a supply that is inelastic relative to the supply represented by the flatter supply curve.
C)   Given two prices with which to calculate the price elasticity of supply, that elasticity would be the same for both curves.
D)   A decrease in demand will increase total revenue if the steeper supply curve is relevant, while a decrease in demand will decrease total revenue if the flatter supply cure is relevant.E) None of the above
F) C) and D)

Question 17

Figure 5-10
 
-Refer to Figure 5-10.An increase in price from $30 to $35 would

Accepted Answer

A)   increase total revenue by $250
B)   decrease total revenue by $250.
C)   increase total revenue by $500.
D)   decrease total revenue by $500.E) C) and D)
F) B) and C)

Question 18

Table 5-5
The following table shows a portion of the demand schedule for a particular good at various levels of income.
 
-Refer to Table 5-5.Using the midpoint method,when income equals $5,000,what is the price elasticity of demand between $8 and $12?

Accepted Answer

A)   0.56
B)   0.75
C)   1.33
D)   1.80E) C) and D)
F) A) and B)

Question 19

The supply of a good will be more elastic,the

Accepted Answer

A)   more the good is considered a luxury.
B)   broader is the definition of the market for the good.
C)   larger the number of close substitutes for the good.
D)   longer the time period being considered.E) None of the above
F) B) and D)

Question 20

Table 5-3
The following table shows the demand schedule for a particular good.
 
-Refer to Table 5-3.Using the midpoint method,when price rises from $6 to $9,the price elasticity of demand is

Accepted Answer

A)   0.43
B)   0.67
C)   1.00
D)   1.5E) A) and B)
F) None of the above

Exam 5: Elasticity and Its Application

Figure 5-11 -Refer to Figure 5-11.If the price rises from point D to point C,total revenue

Correct AnswerverifiedShow Answer

The supply of a good will be more elastic,the

Correct AnswerverifiedShow Answer

Figure 5-1 -Refer to Figure 5-1.Between point A and point B on the graph,demand is

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

The supply of oil is likely to be

Correct AnswerverifiedShow Answer

The OPEC oil cartel has difficulty maintaining high prices in the long run because the supply of oil is more inelastic in the long run than in the short run.

Correct AnswerverifiedShow Answer

If the price elasticity of supply is 1.2,and price increased by 5%,quantity supplied would

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Price elasticity of demand along a linear,downward-sloping demand curve increases as price falls.

Correct AnswerverifiedShow Answer

The price elasticity of supply measures how much

Correct AnswerverifiedShow Answer

In which of the following situations will total revenue increase?

Correct AnswerverifiedShow Answer

Suppose that two supply curves pass through the same point.One is steep,and the other is flat.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Table 5-2 -Refer to Table 5-2.Using the midpoint method,if the price falls from $40 to $20,the absolute value of the price elasticity of demand is

Correct AnswerverifiedShow Answer

The difference between slope and elasticity is that slope

Correct AnswerverifiedShow Answer

Table 5-3 The following table shows the demand schedule for a particular good. -Refer to Table 5-3.Using the midpoint method,when price rises from $6 to $9,the price elasticity of demand is

Correct AnswerverifiedShow Answer

Table 5-5 The following table shows a portion of the demand schedule for a particular good at various levels of income. -Refer to Table 5-5.Using the midpoint method,when income equals $5,000,what is the price elasticity of demand between $8 and $12?

Correct AnswerverifiedShow Answer

If the price elasticity of supply is 0.8,and price increased by 5%,quantity supplied would

Correct AnswerverifiedShow Answer

Figure 5-10 -Refer to Figure 5-10.An increase in price from $30 to $35 would

Correct AnswerverifiedShow Answer

If the price of milk rises,when is the price elasticity of demand likely to be the lowest?

Correct AnswerverifiedShow Answer

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

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

Correct Answer
verified

Correct Answer
verified