Question 1

Table 5-11 
-Refer to Table 5-11. Which scenario describes the market for oil in the short run?

Accepted Answer

A)   A
B)   B
C)   C
D)   DE) A) and B)
F) C) and D)

Question 2

Supply is said to be inelastic if the quantity supplied responds substantially to changes in the price and elastic if the quantity supplied responds only slightly to price.

Accepted Answer

A) True 
 B)False

Question 3

Cross-price elasticity of demand measures how

Accepted Answer

A)   the price of one good changes in response to a change in the price of another good.
B)   the quantity demanded of one good changes in response to a change in the quantity demanded of another good.
C)   the quantity demanded of one good changes in response to a change in the price of another good.
D)   strongly normal or inferior a good is.E) B) and C)
F) A) and D)

Question 4

For which of the following goods is the income elasticity of demand likely lowest?

Accepted Answer

A)   subscriptions to premium movie channels through the local cable television provider
B)   hi-definition DVD players
C)   champagne
D)   housingE) B) and D)
F) B) and C)

Question 5

When the price of candy bars is $1.00, the quantity demanded is 500 per day. When the price falls to $0.80, the quantity demanded increases to 600. Given this information and using the midpoint method, we know that the demand for candy bars is

Accepted Answer

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

Question 6

When demand is elastic, an increase in price will cause

Accepted Answer

A)   an increase in total revenue.
B)   a decrease in total revenue.
C)   no change in total revenue but an increase in quantity demanded.
D)   no change in total revenue but a decrease in quantity demanded.E) C) and D)
F) None of the above

Question 7

Suppose that 50 hot dogs are demanded at a particular price. If the price of hot dogs rises from that price by 5 percent, the number of hot dogs demanded falls to 48. Using the midpoint approach to calculate the price elasticity of demand, it follows that the

Accepted Answer

A)   demand for hot dogs in this price range is unit elastic.
B)   price increase will decrease the total revenue of hot dog sellers.
C)   price elasticity of demand for hot dogs in this price range is about 1.22.
D)   price elasticity of demand for hot dogs in this price range is about 0.82.E) B) and D)
F) A) and B)

Question 8

When the price of a bracelet was $28 each, the jewelry shop sold 128 per month. When it raised the price to $32 each, it sold 112 per month. Using the midpoint method, the price elasticity of demand for bracelets is

Accepted Answer

A)   1.14.
B)   1.
C)   0.25.
D)   0.13.E) A) and B)
F) B) and C)

Question 9

For a particular good, a 3 percent increase in price causes a 10 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Accepted Answer

A)   The relevant time horizon is short.
B)   The good is a necessity.
C)   The market for the good is broadly defined.
D)   There are many close substitutes for this good.E) B) and C)
F) A) and D)

Question 10

Figure 5-3 
-Refer to Figure 5-3. The demand curve representing the demand for a luxury good with several close substitutes is

Accepted Answer

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

Question 11

The demand for gasoline will respond more to a change in price over a period of five weeks than over a period of five years.

Accepted Answer

A) True 
 B)False

Question 12

Cross-price elasticity is used to determine whether goods are inferior or normal goods.

Accepted Answer

A) True 
 B)False

Question 13

Figure 5-5 
-Refer to Figure 5-5. Using the midpoint method, between prices of $50 and $60, price elasticity of demand is about

Accepted Answer

A)   0.22.
B)   0.82.
C)   1.22.
D)   2.E) A) and D)
F) All of the above

Question 14

Suppose demand is given by the equation:  At what price will total revenue be maximized?

Accepted Answer

Total revenue will be maximize...

Question 15

The cross-price elasticity of garlic salt and onion salt is -2, which indicates that garlic salt and onion salt are substitutes.

Accepted Answer

A) True 
 B)False

Question 16

Refer to Table 5-12. Between which two quantities listed is demand most elastic?

Accepted Answer

The answer of Refer to Table 5-12. Between which two...

Question 17

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 C)

Question 18

For a vertical 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) A) and B)
F) All of the above

Question 19

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

Accepted Answer

A)   1.44
B)   1.29
C)   0.96
D)   0.69E) All of the above
F) C) and D)

Question 20

In the long run, the quantity supplied of most goods

Accepted Answer

A)   will increase in almost all cases, regardless of what happens to price.
B)   cannot respond at all to a change in price.
C)   can respond to a change in price, but the change is almost always inconsequential.
D)   can respond substantially to a change in price.E) B) and C)
F) A) and D)

Exam 5: Elasticity and Its Application

The supply of a good will be more elastic, the

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When the price of a bracelet was $28 each, the jewelry shop sold 128 per month. When it raised the price to $32 each, it sold 112 per month. Using the midpoint method, the price elasticity of demand for bracelets is

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For which of the following goods is the income elasticity of demand likely lowest?

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For a vertical demand curve,

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For a particular good, a 3 percent increase in price causes a 10 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

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Cross-price elasticity is used to determine whether goods are inferior or normal goods.

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Table 5-11 -Refer to Table 5-11. Which scenario describes the market for oil in the short run?

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The demand for gasoline will respond more to a change in price over a period of five weeks than over a period of five years.

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Supply is said to be inelastic if the quantity supplied responds substantially to changes in the price and elastic if the quantity supplied responds only slightly to price.

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Suppose demand is given by the equation: At what price will total revenue be maximized?

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When demand is elastic, an increase in price will cause

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

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Refer to Table 5-12. Between which two quantities listed is demand most elastic?

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In the long run, the quantity supplied of most goods

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When the price of candy bars is $1.00, the quantity demanded is 500 per day. When the price falls to $0.80, the quantity demanded increases to 600. Given this information and using the midpoint method, we know that the demand for candy bars is

Correct AnswerverifiedShow Answer

Suppose that 50 hot dogs are demanded at a particular price. If the price of hot dogs rises from that price by 5 percent, the number of hot dogs demanded falls to 48. Using the midpoint approach to calculate the price elasticity of demand, it follows that the

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Figure 5-3 -Refer to Figure 5-3. The demand curve representing the demand for a luxury good with several close substitutes is

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Figure 5-5 -Refer to Figure 5-5. Using the midpoint method, between prices of $50 and $60, price elasticity of demand is about

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Cross-price elasticity of demand measures how

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The cross-price elasticity of garlic salt and onion salt is -2, which indicates that garlic salt and onion salt are substitutes.

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Total revenue will be maximize...
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