Question 1

Suppose that corn farmers want to increase their total revenue. Knowing that the demand for corn is inelastic, corn farmers should

Accepted Answer

A)  plant more corn so that they would be able to sell more each year.
B)  increase spending on fertilizer in an attempt to produce more corn on the acres they farm.
C)  reduce the number of acres on which they plant corn.
D)  contribute to a fund that promotes technological advances in corn production.E) C) and D)
F) All of the above

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Some firms eventually experience problems with their capacity to produce output as their output levels increase. For these firms,

Accepted Answer

A)  market power is substantial.
B)  supply is perfectly inelastic.
C)  supply is more elastic at low levels of output and less elastic at high levels of output.
D)  supply is less elastic at low levels of output and more elastic at high levels of output.E) A) and B)
F) B) and C)

Question 4

If the price elasticity of demand is 1.5, regardless of which two points on the demand curve are used to compute the elasticity, then demand is

Accepted Answer

A)  perfectly inelastic, and the demand curve is vertical.
B)  elastic, and the demand curve is a straight, downward-sloping line.
C)  perfectly elastic, and the demand curve is horizontal.
D)  elastic, and the demand curve is something other than a straight, downward-sloping line.E) None of the above
F) A) and B)

Question 5

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

Accepted Answer

A)  milk
B)  sailboats
C)  good X in the short run compared to good X in the long run
D)  gasolineE) B) and C)
F) All of the above

Question 6

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

Question 7

Your younger sister needs $50 to buy a new bike. She has opened a lemonade stand to make the money she needs. Your mother is paying for all of the ingredients. She currently is charging 25 cents per cup, but she wants to adjust her price to earn the $50 faster. If you know that the demand for lemonade is elastic, what is your advice to her?

Accepted Answer

A)  Leave the price at 25 cents and be patient.
B)  Raise the price to increase total revenue.
C)  Lower the price to increase total revenue.
D)  There isn't enough information given to answer this question.E) None of the above
F) A) and D)

Question 8

Figure 5-21 
-Refer to Figure 5-21. Using the midpoint method, what is the price elasticity of supply between $25 and $35?

Accepted Answer

The price ...

Question 9

A recent news report lamented the plight of corn farmers in Wisconsin due to a severe drought. Which of the following best describes the effect on corn farmers in Minnesota, where sufficient rainfall occurred?

Accepted Answer

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

Question 10

Table 5-2 
-Refer to Table 5-2. Using the midpoint method, if the price falls from $200 to $150, the absolute value of the price elasticity of demand is

Accepted Answer

A)  5.3.
B)  2.8.
C)  0.8.
D)  0.36.E) A) and B)
F) C) and D)

Question 11

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

Accepted Answer

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

Question 12

The flatter the demand curve that passes through a given point, the more inelastic the demand.

Accepted Answer

A) True 
 B)False

Question 13

In general, demand curves for necessities tend to be price elastic.

Accepted Answer

A) True 
 B)False

Question 14

In January the price of dark chocolate candy bars was $2.00, and Willy's Chocolate Factory produced 80 pounds. In February the price of dark chocolate candy bars was $2.50, and Willy's produced 110 pounds. In March the price of dark chocolate candy bars was $3.00, and Willy's produced 140 pounds. The price elasticity of supply of Willy's dark chocolate candy bars was about

Accepted Answer

A)  0.70 when the price increased from $2.00 to $2.50 and 0.76 when the price increased from $2.50 to $3.00.
B)  0.88 when the price increased from $2.00 to $2.50 and 1.08 when the price increased from $2.50 to $3.00.
C)  1.42 when the price increased from $2.00 to $2.50 and 1.32 when the price increased from $2.50 to $3.00.
D)  1.50 when the price increased from $2.00 to $2.50 and 1.18 when the price increased from $2.50 to $3.00.E) B) and C)
F) A) and D)

Question 15

If a firm that produces honey is facing elastic demand, then the firm would decrease price to increase revenue.

Accepted Answer

A) True 
 B)False

Question 16

In the short run, as compared to the long run, both the price elasticity of demand and the price elasticity of supply tend to be more

Accepted Answer

The answer of In the short run, as compared to...

Question 17

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 18

Figure 5-19    
-Refer to Figure 5-19. Which of the following statements is not correct?

Accepted Answer

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

Question 19

Table 5-1 
-Refer to Table 5-1. Which of the following is consistent with the elasticities given in Table 5-1?

Accepted Answer

A)  A is laundry detergent and B is Tide.
B)  A is Diet Pepsi and B is soda.
C)  A is food and B is a yacht.
D)  A is toilet paper and B is candles.E) C) and D)
F) None of the above

Question 20

Which of the following statements about the price elasticity of demand is correct?

Accepted Answer

A)  The price elasticity of demand for a good measures the willingness of buyers of the good to buy less of the good as its price increases.
B)  Price elasticity of demand reflects the many economic, psychological, and social forces that shape consumer tastes.
C)  Other things equal, if good x has close substitutes and good y does not have close substitutes, then the demand for good x will be more elastic than the demand for good y.
D)  All of the above are correct.E) A) and B)
F) A) and C)

Exam 5: Elasticity and Its Application

Correct Answer
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Table 5-2 -Refer to Table 5-2. Using the midpoint method, if the price falls from $200 to $150, the absolute value of the price elasticity of demand is

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

Correct Answer
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The flatter the demand curve that passes through a given point, the more inelastic the demand.

Correct Answer
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Some firms eventually experience problems with their capacity to produce output as their output levels increase. For these firms,

Correct Answer
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If the price elasticity of demand is 1.5, regardless of which two points on the demand curve are used to compute the elasticity, then demand is

Correct Answer
verified

A recent news report lamented the plight of corn farmers in Wisconsin due to a severe drought. Which of the following best describes the effect on corn farmers in Minnesota, where sufficient rainfall occurred?

Correct Answer
verified

If a firm that produces honey is facing elastic demand, then the firm would decrease price to increase revenue.

Correct Answer
verified

Suppose that corn farmers want to increase their total revenue. Knowing that the demand for corn is inelastic, corn farmers should

Correct Answer
verified

Figure 5-21 -Refer to Figure 5-21. Using the midpoint method, what is the price elasticity of supply between $25 and $35?

Correct Answer
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The price ...
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Which of the following is likely to have the most price elastic demand?

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

Correct Answer
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In general, demand curves for necessities tend to be price elastic.

Correct Answer
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Which of the following statements about the price elasticity of demand is correct?

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Figure 5-19 -Refer to Figure 5-19. Which of the following statements is not correct?

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Table 5-1 -Refer to Table 5-1. Which of the following is consistent with the elasticities given in Table 5-1?

Correct Answer
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In the short run, as compared to the long run, both the price elasticity of demand and the price elasticity of supply tend to be more

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

Correct Answer
verified

Exam 5: Elasticity and Its Application

Correct AnswerverifiedShow Answer

Table 5-2 -Refer to Table 5-2. Using the midpoint method, if the price falls from $200 to $150, the absolute value of the price elasticity of demand is

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 flatter the demand curve that passes through a given point, the more inelastic the demand.

Correct AnswerverifiedShow Answer

Some firms eventually experience problems with their capacity to produce output as their output levels increase. For these firms,

Correct AnswerverifiedShow Answer

If the price elasticity of demand is 1.5, regardless of which two points on the demand curve are used to compute the elasticity, then demand is

Correct AnswerverifiedShow Answer

A recent news report lamented the plight of corn farmers in Wisconsin due to a severe drought. Which of the following best describes the effect on corn farmers in Minnesota, where sufficient rainfall occurred?

Correct AnswerverifiedShow Answer

If a firm that produces honey is facing elastic demand, then the firm would decrease price to increase revenue.

Correct AnswerverifiedShow Answer

Suppose that corn farmers want to increase their total revenue. Knowing that the demand for corn is inelastic, corn farmers should

Correct AnswerverifiedShow Answer

Figure 5-21 -Refer to Figure 5-21. Using the midpoint method, what is the price elasticity of supply between $25 and $35?

Correct AnswerverifiedThe price ...View AnswerShow Answer

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

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

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

Correct AnswerverifiedShow Answer

In general, demand curves for necessities tend to be price elastic.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements about the price elasticity of demand is correct?

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Figure 5-19 -Refer to Figure 5-19. Which of the following statements is not correct?

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Table 5-1 -Refer to Table 5-1. Which of the following is consistent with the elasticities given in Table 5-1?

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In the short run, as compared to the long run, both the price elasticity of demand and the price elasticity of supply tend to be more

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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The price ...
View Answer

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