Question 1

Table 5-5
​
​
 $$\begin{array} { | c | c | } 
\hline \text { Price } & \text { Quantity Demanded } \
\hline \$ 0 & 50 \
\hline \$ 2 & 40 \
\hline \$ 4 & 30 \
\hline \$ 6 & 20 \
\hline 48 & 10 \
\hline
\end{array}$$
-Refer to Table 5-5. Between which two quantities listed is demand unit elastic?

Accepted Answer

The answer of Table 5-5
​
​
 \[\begin{array} { | c |...

Question 2

If we observe that when the price of ice cream rises by 10%, ice cream manufacturers increase the quantity supplied of ice cream by 20%, then the price elasticity of supply is 2.

Accepted Answer

A) True 
 B)False

Question 3

The price elasticity of demand measures

Accepted Answer

A)  buyers' responsiveness to a change in the price of a good.
B)  the extent to which demand increases as additional buyers enter the market.
C)  how much more of a good consumers will demand when incomes rise.
D)  the movement along a supply curve when there is a change in demand.E) None of the above
F) All of the above

Question 4

If we observe that when the price of chocolate candy bars increases by 10%, quantity demanded decreases total by 10%, then the demand for chocolate candy bars is unit price elastic.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following statements about agriculture in the United States is correct?

Accepted Answer

A)  From the 1950s to today, agricultural output has approximately doubled.
B)  Because technological improvements increase the supply of a product for which demand is inelastic, an individual farmer would be better off not adopting the new technology.
C)  Increasing the supply of agricultural products typically benefits consumers but harms farmers as a group.
D)  Technological improvements typically increase both supply and revenue for individual farmers.E) B) and C)
F) A) and B)

Question 6

Suppose that gasoline prices increase dramatically this month. Kaliah commutes 100 miles to work each weekday. Over the next few months, Kaliah drives less on the weekends to try to save money. Within the year, she sells her home and purchases one only 10 miles from her place of employment. These examples illustrate the importance of

Accepted Answer

A)  the time horizon in determining the price elasticity of demand.
B)  the availability of close substitutes in determining the price elasticity of demand.
C)  a necessity versus a luxury in determining the price elasticity of demand.
D)  the definition of a market in determining the price elasticity of demand.E) All of the above
F) B) and C)

Question 7

When small changes in price lead to infinite changes in quantity demanded, demand is perfectly

Accepted Answer

A)  elastic, and the demand curve will be horizontal.
B)  inelastic, and the demand curve will be horizontal.
C)  elastic, and the demand curve will be vertical.
D)  inelastic, and the demand curve will be vertical.E) C) and D)
F) All of the above

Question 8

A good will have a more inelastic demand, the

Accepted Answer

A)  greater the availability of close substitutes.
B)  broader the definition of the market.
C)  longer the period of time.
D)  more it is regarded as a luxury.E) B) and D)
F) B) and C)

Question 9

Suppose that when the price rises by 20% for a particular good, the quantity demanded of that good falls by 10%. The price elasticity of demand for this good is equal to 2.0.

Accepted Answer

A) True 
 B)False

Question 10

Skip's Sealcoating Service increased its total monthly revenue from $12,000 to $13,500 when it raised the price of driveway repairs from $600 to $750. The price elasticity of demand for Skip's Sealcoating Service is

Accepted Answer

A)  0.11.
B)  0.47.
C)  1.12.
D)  2.11.E) B) and D)
F) A) and B)

Question 11

Figure 5-3
  ​
-Refer to Figure 5-3. The maximum value of total revenue corresponds to a price of

Accepted Answer

A)  $20.
B)  $50.
C)  $70.
D)  $100.E) All of the above
F) A) and D)

Question 12

Which of the following was not a reason OPEC failed to keep the price of oil high?

Accepted Answer

A)  Over the long run, producers of oil outside of OPEC responded to higher prices by increasing oil exploration and by building new extraction capacity.
B)  Consumers responded to higher prices with greater conservation.
C)  Consumers replaced old inefficient cars with newer efficient ones.
D)  The agreement OPEC members signed allowed each country to produce as much oil as each wanted.E) None of the above
F) C) and D)

Question 13

Adam and Barb go to the store to purchase some lottery tickets. Without looking at the price, Adam says "I'll take 10 lottery tickets," and Barb says "I'll take $10 worth of lottery tickets." What is each person's price elasticity of demand for lottery tickets?

Accepted Answer

Since Adam wants 10 tickets regardless o...

Question 14

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 15

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) A) and C)
F) All of the above

Question 16

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

Accepted Answer

A)  The definition of the market for the good
B)  The flatness of the supply curve for the good
C)  The availability of substitutes for the good
D)  Whether a good is a necessity or a luxuryE) C) and D)
F) None of the above

Question 17

Figure 5-6
  ​
-Refer to Figure 5-6. Using the midpoint method, what is the price elasticity of supply between points F and E?

Accepted Answer

A)  2.33
B)  0.67
C)  0.29
D)  0.43E) C) and D)
F) B) and C)

Question 18

Demand for a good is said to be inelastic if the quantity demanded increases substantially when the price falls by a small amount.

Accepted Answer

A) True 
 B)False

Question 19

Income elasticity of demand measures how

Accepted Answer

A)  the quantity demanded changes as consumer income changes.
B)  consumer purchasing power is affected by a change in the price of a good.
C)  the price of a good is affected when there is a change in consumer income.
D)  many units of a good a consumer can buy given a certain income level.E) B) and C)
F) All of the above

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 5: Elasticity and Its Application

Correct Answer
verified

Figure 5-6 -Refer to Figure 5-6. Using the midpoint method, what is the price elasticity of supply between points F and E?

Correct Answer
verified

Skip's Sealcoating Service increased its total monthly revenue from $12,000 to $13,500 when it raised the price of driveway repairs from $600 to $750. The price elasticity of demand for Skip's Sealcoating Service is

Correct Answer
verified

Income elasticity of demand measures how

Correct Answer
verified

Suppose that when the price rises by 20% for a particular good, the quantity demanded of that good falls by 10%. The price elasticity of demand for this good is equal to 2.0.

Correct Answer
verified

Which of the following was not a reason OPEC failed to keep the price of oil high?

Correct Answer
verified

When small changes in price lead to infinite changes in quantity demanded, demand is perfectly

Correct Answer
verified

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

Correct Answer
verified

Figure 5-3 -Refer to Figure 5-3. The maximum value of total revenue corresponds to a price of

Correct Answer
verified

Which of the following statements about agriculture in the United States is correct?

Correct Answer
verified

Cross-price elasticity of demand measures how

Correct Answer
verified

If we observe that when the price of chocolate candy bars increases by 10%, quantity demanded decreases total by 10%, then the demand for chocolate candy bars is unit price elastic.

Correct Answer
verified

If we observe that when the price of ice cream rises by 10%, ice cream manufacturers increase the quantity supplied of ice cream by 20%, then the price elasticity of supply is 2.

Correct Answer
verified

Adam and Barb go to the store to purchase some lottery tickets. Without looking at the price, Adam says "I'll take 10 lottery tickets," and Barb says "I'll take $10 worth of lottery tickets." What is each person's price elasticity of demand for lottery tickets?

Correct Answer
verified
Since Adam wants 10 tickets regardless o...
View Answer

The price elasticity of demand measures

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

Table 5-5 $\begin{array} { | c | c | } \hline \text { Price } & \text { Quantity Demanded } \\\hline \$ 0 & 50 \\\hline \$ 2 & 40 \\\hline \$ 4 & 30 \\\hline \$ 6 & 20 \\\hline 48 & 10 \\\hline\end{array}$ -Refer to Table 5-5. Between which two quantities listed is demand unit elastic?

Correct Answer
verified

A good will have a more inelastic demand, the

Correct Answer
verified

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

Correct Answer
verified

Demand for a good is said to be inelastic if the quantity demanded increases substantially when the price falls by a small amount.

Correct Answer
verified

Exam 5: Elasticity and Its Application

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Figure 5-6 ​ -Refer to Figure 5-6. Using the midpoint method, what is the price elasticity of supply between points F and E?

Correct AnswerverifiedShow Answer

Skip's Sealcoating Service increased its total monthly revenue from $12,000 to $13,500 when it raised the price of driveway repairs from $600 to $750. The price elasticity of demand for Skip's Sealcoating Service is

Correct AnswerverifiedShow Answer

Income elasticity of demand measures how

Correct AnswerverifiedShow Answer

Suppose that when the price rises by 20% for a particular good, the quantity demanded of that good falls by 10%. The price elasticity of demand for this good is equal to 2.0.

Correct AnswerverifiedShow Answer

Which of the following was not a reason OPEC failed to keep the price of oil high?

Correct AnswerverifiedShow Answer

When small changes in price lead to infinite changes in quantity demanded, demand is perfectly

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 5-3 ​ -Refer to Figure 5-3. The maximum value of total revenue corresponds to a price of

Correct AnswerverifiedShow Answer

Which of the following statements about agriculture in the United States is correct?

Correct AnswerverifiedShow Answer

Cross-price elasticity of demand measures how

Correct AnswerverifiedShow Answer

If we observe that when the price of chocolate candy bars increases by 10%, quantity demanded decreases total by 10%, then the demand for chocolate candy bars is unit price elastic.

Correct AnswerverifiedShow Answer

If we observe that when the price of ice cream rises by 10%, ice cream manufacturers increase the quantity supplied of ice cream by 20%, then the price elasticity of supply is 2.

Correct AnswerverifiedShow Answer

Adam and Barb go to the store to purchase some lottery tickets. Without looking at the price, Adam says "I'll take 10 lottery tickets," and Barb says "I'll take $10 worth of lottery tickets." What is each person's price elasticity of demand for lottery tickets?

Correct AnswerverifiedSince Adam wants 10 tickets regardless o...View AnswerShow Answer

The price elasticity of demand measures

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

Correct AnswerverifiedShow Answer

A good will have a more inelastic demand, the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Demand for a good is said to be inelastic if the quantity demanded increases substantially when the price falls by a small amount.

Correct AnswerverifiedShow Answer

Correct Answer
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Figure 5-6 -Refer to Figure 5-6. Using the midpoint method, what is the price elasticity of supply between points F and E?

Correct Answer
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Figure 5-3 -Refer to Figure 5-3. The maximum value of total revenue corresponds to a price of

Correct Answer
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Since Adam wants 10 tickets regardless o...
View Answer

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