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If soybean farmers know that the demand for soybeans is inelastic, in order to increase their total revenues they should


A) use more fertilizers and weed killers to increase their yields.
B) plant additional acres to increase their output.
C) reduce the number of acres they plant to decrease their output.
D) Both a and b are correct.

E) C) and D)
F) All of the above

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-Refer to Table 5-12. Using the midpoint method, what is the price elasticity of demand between $2 and $4? -Refer to Table 5-12. Using the midpoint method, what is the price elasticity of demand between $2 and $4?

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The price ...

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Charles purchases 20 basketball tickets per year when his annual income is $50,000 and 25 basketball tickets when his annual income is $60,000. Charles's income elasticity of demand for basketball ticket is


A) 0.82, and basketball tickets are a normal good.
B) 0.82, and basketball tickets are an inferior good.
C) 1.22, and basketball tickets are a normal good.
D) 1.22, and basketball tickets are an inferior good.

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

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If the price elasticity of demand is equal to 1, then demand is unit elastic.

A) True
B) False

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Figure 5-15 Figure 5-15 -Refer to Figure 5-15. Using the midpoint method, what is the price elasticity of supply between points C and D? A) 0.21 B) 0.29 C) 0.73 D) 1.36 -Refer to Figure 5-15. Using the midpoint method, what is the price elasticity of supply between points C and D?


A) 0.21
B) 0.29
C) 0.73
D) 1.36

E) B) and D)
F) A) and B)

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If the price elasticity of demand for a good is 0.2, then a 3 percent decrease in price results in a


A) 0.6 percent increase in the quantity demanded.
B) 1.5 percent increase in the quantity demanded.
C) 2 percent increase in the quantity demanded.
D) 6 percent increase in the quantity demanded.

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

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Suppose demand is perfectly elastic, and the supply of the good in question decreases. As a result,


A) the equilibrium quantity decreases, and the equilibrium price is unchanged.
B) the equilibrium price increases, and the equilibrium quantity is unchanged.
C) the equilibrium quantity and the equilibrium price both are unchanged.
D) buyers' total expenditure on the good is unchanged.

E) All of the above
F) B) and C)

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If a firm is facing inelastic demand, then the firm should decrease price to increase revenue.

A) True
B) False

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If the cross-price elasticity of demand for two goods is negative, then the two goods are substitutes.

A) True
B) False

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A discovery that increases wheat yields per acre hurts farmers by increasing supply and lowering their total revenues.

A) True
B) False

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


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

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If demand is perfectly inelastic, the demand curve is vertical, and the price elasticity of demand equals 0.

A) True
B) False

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Figure 5-20 Figure 5-20 -Refer to Figure 5-20. Which supply curve is most likely relevant over a very long period of time? A) S1 B) S2 C) S3 D) All of the above are equally likely to be relevant over a very long period of time. -Refer to Figure 5-20. Which supply curve is most likely relevant over a very long period of time?


A) S1
B) S2
C) S3
D) All of the above are equally likely to be relevant over a very long period of time.

E) All of the above
F) None of the above

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

A) True
B) False

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Figure 5-4 Figure 5-4 -Refer to Figure 5-4. If the price decreases in the region of the demand curve between points B and C, we can expect total revenue to A) increase. B) stay the same. C) decrease. D) first increase, then decrease until total revenue is maximized. -Refer to Figure 5-4. If the price decreases in the region of the demand curve between points B and C, we can expect total revenue to


A) increase.
B) stay the same.
C) decrease.
D) first increase, then decrease until total revenue is maximized.

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

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Table 5-7 The following table shows a portion of the demand schedule for a particular good at various levels of income. Table 5-7 The following table shows a portion of the demand schedule for a particular good at various levels of income. -Refer to Table 5-7. Using the midpoint method, when income equals $7,500, what is the price elasticity of demand between $16 and $20? A) 0.56 B) 0.75 C) 1.33 D) 1.80 -Refer to Table 5-7. Using the midpoint method, when income equals $7,500, what is the price elasticity of demand between $16 and $20?


A) 0.56
B) 0.75
C) 1.33
D) 1.80

E) All of the above
F) B) and D)

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Consider the following pairs of goods. For which of the two goods would you expect the demand to be more price elastic? Why? a. water or diamonds b. insulin or nasal decongestant spray c. food in general or breakfast cereal d. gasoline over the course of a week or gasoline over the course of a year e. personal computers or IBM personal computers

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a. Diamonds are luxuries, and water is a...

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Frequently, in the short run, the quantity supplied of a good is


A) impossible, or nearly impossible, to measure.
B) not very responsive to price changes.
C) determined by the quantity demanded of the good.
D) determined by psychological forces and other non-economic forces.

E) A) and D)
F) B) and D)

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When the price of good A is $50, the quantity demanded of good A is 500 units. When the price of good A rises to $70, the quantity demanded of good A falls to 400 units. Using the midpoint method, the price elasticity of demand for good A is


A) 1.50, and an increase in price will result in an increase in total revenue for good A.
B) 1.50, and an increase in price will result in a decrease in total revenue for good A.
C) 0.67, and an increase in price will result in an increase in total revenue for good A.
D) 0.67, and an increase in price will result in a decrease in total revenue for good A.

E) All of the above
F) B) and C)

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

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