Question 1

Scenario 5-3
Suppose that the supply of aged cheddar cheese is inelastic, and the supply of bread is elastic. Both goods are considered to be normal goods by a majority of consumers. Suppose that a large income tax increase decreases the demand for both goods by 10%.
-Refer to Scenario 5-3. The price elasticity of supply for aged cheddar cheese could be

Accepted Answer

A)  -1.
B)  0.
C)  0.5.
D)  1.5.E) All of the above
F) A) and B)

Question 2

Figure 5-9 
-Refer to Figure 5-9. Using the midpoint method, the price elasticity of demand between point C and point D is about

Accepted Answer

A)  0.29.
B)  0.54.
C)  1.86.
D)  2.0.E) B) and C)
F) B) and D)

Question 3

Suppose a market has the demand function Qd=20-0.5P. At what price will total revenue be maximized?

Accepted Answer

Question 4

Other things equal, the demand for a good tends to be more inelastic, the

Accepted Answer

A)  fewer the available substitutes.
B)  longer the time period considered.
C)  more the good is considered a luxury good.
D)  more narrowly defined is the market for the good.E) C) and D)
F) All of the above

Question 5

Which of the following could be the cross-price elasticity of demand for two goods that are complements?

Accepted Answer

A)  -1.3
B)  0
C)  0.2
D)  1.4E) All of the above
F) B) and C)

Question 6

Given the market for illegal drugs, when the government is successful in reducing the flow of drugs into the United States,

Accepted Answer

A)  supply decreases, demand is unaffected, and price increases.
B)  demand decreases, supply is unaffected, and price decreases.
C)  demand and supply both decrease, leaving price essentially unchanged.
D)  supply decreases, demand increases, and price increases substantially.E) All of the above
F) C) and D)

Question 7

If the price elasticity of supply is 2 and the quantity supplied decreases by 6%, then the price must have decreased by 3%.

Accepted Answer

A) True 
 B)False

Question 8

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

Question 9

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 B)
F) B) and C)

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

If the price elasticity of demand for a good is 1.4, then a 14 percent increase in the quantity demanded must be the result of

Accepted Answer

A)  a 0.1 percent decrease in the price.
B)  a 1 percent decrease in the price.
C)  a 10 percent decrease in the price.
D)  a 19.6 percent decrease in the price.E) A) and B)
F) A) and C)

Question 12

The demand for desserts tends to be more inelastic than the demand for red velvet cake.

Accepted Answer

A) True 
 B)False

Question 13

Suppose the price elasticity of supply for soccer balls is 0.3 in the short run and 1.2 in the long run. If an increase in the demand for soccer balls causes the price of soccer balls to increase by 20%, then the quantity supplied of soccer balls will increase by about

Accepted Answer

A)  0.67% in the short run and 0.17% in the long run.
B)  3% in the short run and 1.2% in the long run.
C)  6% in the short run and 24% in the long run.
D)  66.7% in the short run and 16.7% in the long run.E) B) and C)
F) A) and C)

Question 14

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

Accepted Answer

A)  white chocolate chip with macadamia nut cookies
B)  hardback novels
C)  salt
D)  box seats at a major league baseball gameE) B) and D)
F) C) and D)

Question 15

A key determinant of the price elasticity of supply is the

Accepted Answer

A)  time horizon.
B)  income of consumers.
C)  price elasticity of demand.
D)  importance of the good in a consumer's budget.E) B) and C)
F) All of the above

Question 16

For a good that is a necessity, demand

Accepted Answer

A)  tends to be inelastic.
B)  tends to be elastic.
C)  has unit elasticity.
D)  cannot be represented by a demand curve in the usual way.E) B) and C)
F) A) and B)

Question 17

For which of the following goods is the price elasticity of demand most inelastic?

Accepted Answer

A)  pizza
B)  large pizza
C)  large pepperoni pizza
D)  Domino's large pepperoni pizzaE) B) and C)
F) None of the above

Question 18

If the price elasticity of demand for aluminum foil is 1.45, then a 2.4% decrease in the price of aluminum foil will increase the quantity demanded of aluminum foil by

Accepted Answer

A)  1.66%, and aluminum foil sellers' total revenue will increase as a result.
B)  1.66%, and aluminum foil sellers' total revenue will decrease as a result.
C)  3.48%, and aluminum foil sellers' total revenue will increase as a result.
D)  3.48%, and aluminum foil sellers' total revenue will decrease as a result.E) B) and D)
F) B) and C)

Question 19

The case of perfectly elastic demand is illustrated by a demand curve that is

Accepted Answer

A)  vertical.
B)  horizontal.
C)  downward-sloping but relatively steep.
D)  downward-sloping but relatively flat.E) B) and C)
F) A) and D)

Question 20

Which of the following could be the price elasticity of demand for a good for which a decrease in price would decrease revenue?

Accepted Answer

A)  0.8
B)  1
C)  1.8
D)  2.4E) B) and D)
F) All of the above

Exam 5: Elasticity and Its Application

Given the market for illegal drugs, when the government is successful in reducing the flow of drugs into the United States,

Correct Answer
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If the price elasticity of demand for a good is 1.4, then a 14 percent increase in the quantity demanded must be the result of

Correct Answer
verified

If the price elasticity of supply is 2 and the quantity supplied decreases by 6%, then the price must have decreased by 3%.

Correct Answer
verified

Suppose the price elasticity of supply for soccer balls is 0.3 in the short run and 1.2 in the long run. If an increase in the demand for soccer balls causes the price of soccer balls to increase by 20%, then the quantity supplied of soccer balls will increase by about

Correct Answer
verified

The case of perfectly elastic demand is illustrated by a demand curve that is

Correct Answer
verified

Suppose a market has the demand function Q^d=20-0.5P. At what price will total revenue be maximized?

Correct Answer
verified

Correct Answer
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A key determinant of the price elasticity of supply is the

Correct Answer
verified

The demand for desserts tends to be more inelastic than the demand for red velvet cake.

Correct Answer
verified

If the price elasticity of demand for aluminum foil is 1.45, then a 2.4% decrease in the price of aluminum foil will increase the quantity demanded of aluminum foil by

Correct Answer
verified

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

Correct Answer
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Which of the following is likely to have the most price inelastic demand?

Correct Answer
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For a good that is a necessity, demand

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

Correct Answer
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Other things equal, the demand for a good tends to be more inelastic, the

Correct Answer
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Which of the following could be the price elasticity of demand for a good for which a decrease in price would decrease revenue?

Correct Answer
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For which of the following goods is the price elasticity of demand most inelastic?

Correct Answer
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Figure 5-9 -Refer to Figure 5-9. Using the midpoint method, the price elasticity of demand between point C and point D is about

Correct Answer
verified

Correct Answer
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Which of the following could be the cross-price elasticity of demand for two goods that are complements?

Correct Answer
verified

Exam 5: Elasticity and Its Application

Given the market for illegal drugs, when the government is successful in reducing the flow of drugs into the United States,

Correct AnswerverifiedShow Answer

If the price elasticity of demand for a good is 1.4, then a 14 percent increase in the quantity demanded must be the result of

Correct AnswerverifiedShow Answer

If the price elasticity of supply is 2 and the quantity supplied decreases by 6%, then the price must have decreased by 3%.

Correct AnswerverifiedShow Answer

Suppose the price elasticity of supply for soccer balls is 0.3 in the short run and 1.2 in the long run. If an increase in the demand for soccer balls causes the price of soccer balls to increase by 20%, then the quantity supplied of soccer balls will increase by about

Correct AnswerverifiedShow Answer

The case of perfectly elastic demand is illustrated by a demand curve that is

Correct AnswerverifiedShow Answer

Suppose a market has the demand function Qd=20-0.5P. At what price will total revenue be maximized?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A key determinant of the price elasticity of supply is the

Correct AnswerverifiedShow Answer

The demand for desserts tends to be more inelastic than the demand for red velvet cake.

Correct AnswerverifiedShow Answer

If the price elasticity of demand for aluminum foil is 1.45, then a 2.4% decrease in the price of aluminum foil will increase the quantity demanded of aluminum foil by

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

For a good that is a necessity, demand

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Other things equal, the demand for a good tends to be more inelastic, the

Correct AnswerverifiedShow Answer

Which of the following could be the price elasticity of demand for a good for which a decrease in price would decrease revenue?

Correct AnswerverifiedShow Answer

For which of the following goods is the price elasticity of demand most inelastic?

Correct AnswerverifiedShow Answer

Figure 5-9 -Refer to Figure 5-9. Using the midpoint method, the price elasticity of demand between point C and point D is about

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following could be the cross-price elasticity of demand for two goods that are complements?

Correct AnswerverifiedShow Answer

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Suppose a market has the demand function Q^d=20-0.5P. At what price will total revenue be maximized?

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