Question 1

For which pairs of goods is the cross-price elasticity most likely to be positive?

Accepted Answer

A)   peanut butter and jelly
B)   bicycle frames and bicycle tires
C)   pens and pencils
D)   college textbooks and iPodsE) A) and B)
F) B) and D)

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements is not correct concerning government attempts to reduce the flow of illegal drugs into the country? Drug interdiction

Accepted Answer

A)   raises prices and total revenue in the drug market.
B)   can increase drug-related crime.
C)   shifts the demand curve for drugs to the left.
D)   shifts the supply curve of drugs to the left.E) C) and D)
F) A) and D)

Question 4

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

Question 5

Figure 5-4 
-Refer to Figure 5-4.The section of the demand curve at point B represents the

Accepted Answer

A)   elastic section of the demand curve.
B)   inelastic section of the demand curve.
C)   unit elastic section of the demand curve.
D)   perfectly elastic section of the demand curve.E) A) and C)
F) B) and D)

Question 6

Reta's income elasticity of demand for steak dinners is 1.50.All else equal,this means that if her income increases by 20 percent,she will buy

Accepted Answer

A)   150 percent more steak dinners.
B)   50 percent more steak dinners.
C)   30 percent more steak dinners.
D)   20 percent more steak dinners.E) A) and B)
F) A) and C)

Question 7

Figure 5-13 
-Refer to Figure 5-13.Using the midpoint method,what is the price elasticity of supply between $16 and $40?

Accepted Answer

A)   0.125
B)   0.86
C)   1.0
D)   2.5E) None of the above
F) B) and C)

Question 8

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

Accepted Answer

A)   ice cream
B)   frozen yogurt
C)   vanilla ice cream
D)   Häagen-Dazs® vanilla bean ice creamE) All of the above
F) A) and C)

Question 9

If the quantity supplied responds only slightly to changes in price,then

Accepted Answer

A)   supply is said to be elastic.
B)   supply is said to be inelastic.
C)   an increase in price will not shift the supply curve very much.
D)   even a large decrease in demand will change the equilibrium price only slightly.E) None of the above
F) All of the above

Question 10

Table 5-3
The following table shows the demand schedule for a particular good.
 
-Refer to Table 5-3.Using the midpoint method,what is the price elasticity of demand when price rises from $9 to $12?

Accepted Answer

A)   0.43
B)   0.67
C)   1.50
D)   2.33E) B) and C)
F) A) and D)

Question 11

In which of the following situations will total revenue increase?

Accepted Answer

A)   Price elasticity of demand is 1.2,and the price of the good decreases.
B)   Price elasticity of demand is 0.5,and the price of the good increases.
C)   Price elasticity of demand is 3.0,and the price of the good decreases.
D)   All of the above are correct.E) All of the above
F) A) and B)

Question 12

If the demand for apples is elastic,then an increase in the price of apples will

Accepted Answer

A)   increase total revenue of apple sellers.
B)   decrease total revenue of apple sellers.
C)   not change total revenue of apple sellers.
D)   There is not enough information to answer this question.E) B) and C)
F) C) and D)

Question 13

Supply tends to be more elastic in the short run and more inelastic in the long run.

Accepted Answer

A) True 
 B)False

Question 14

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

Question 15

Goods with close substitutes tend to have more elastic demands than do goods without close substitutes.

Accepted Answer

A) True 
 B)False

Question 16

When studying how some event or policy affects a market,elasticity provides information on the

Accepted Answer

A)   government expenditures associated with the policy.
B)   costs and benefits of the effect.
C)   allocative efficiency of the effect.
D)   direction and magnitude of the effect.E) None of the above
F) C) and D)

Question 17

Figure 5-18 
-Refer to Figure 5-18.Which supply curve represents perfectly inelastic supply?

Accepted Answer

A)   S1
B)   S2
C)   S3
D)   None of the supply curves is perfectly inelastic.E) All of the above
F) B) and C)

Question 18

Figure 5-4 
-Refer to Figure 5-4.The section of the demand curve from A to B represents the

Accepted Answer

A)   elastic section of the demand curve.
B)   inelastic section of the demand curve.
C)   unit elastic section of the demand curve.
D)   perfectly elastic section of the demand curve.E) C) and D)
F) B) and C)

Question 19

If the income elasticity of demand for a good is 0.56,is the good a normal or inferior good?

Accepted Answer

The good i...

Question 20

Figure 5-2 
-Refer to Figure 5-2.As price falls from Pa to Pb,we could use the three demand curves to calculate three different values of the price elasticity of demand.Which of the three demand curves would produce the smallest elasticity?

Accepted Answer

A)   D1
B)   D2
C)   D3
D)   All of the above are equally elastic.E) None of the above
F) A) and D)

Exam 5: Elasticity and Its Application

Reta's income elasticity of demand for steak dinners is 1.50.All else equal,this means that if her income increases by 20 percent,she will buy

Correct Answer
verified

In which of the following situations will total revenue increase?

Correct Answer
verified

Correct Answer
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Figure 5-18 -Refer to Figure 5-18.Which supply curve represents perfectly inelastic supply?

Correct Answer
verified

Figure 5-4 -Refer to Figure 5-4.The section of the demand curve from A to B represents the

Correct Answer
verified

Goods with close substitutes tend to have more elastic demands than do goods without close substitutes.

Correct Answer
verified

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

Correct Answer
verified

If the quantity supplied responds only slightly to changes in price,then

Correct Answer
verified

Figure 5-13 -Refer to Figure 5-13.Using the midpoint method,what is the price elasticity of supply between $16 and $40?

Correct Answer
verified

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

Correct Answer
verified

Figure 5-2 -Refer to Figure 5-2.As price falls from Pa to Pb,we could use the three demand curves to calculate three different values of the price elasticity of demand.Which of the three demand curves would produce the smallest elasticity?

Correct Answer
verified

If the income elasticity of demand for a good is 0.56,is the good a normal or inferior good?

Correct Answer
verified
The good i...
View Answer

For which pairs of goods is the cross-price elasticity most likely to be positive?

Correct Answer
verified

Figure 5-4 -Refer to Figure 5-4.The section of the demand curve at point B represents the

Correct Answer
verified

If the demand for apples is elastic,then an increase in the price of apples will

Correct Answer
verified

Table 5-3 The following table shows the demand schedule for a particular good. -Refer to Table 5-3.Using the midpoint method,what is the price elasticity of demand when price rises from $9 to $12?

Correct Answer
verified

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

Correct Answer
verified

Supply tends to be more elastic in the short run and more inelastic in the long run.

Correct Answer
verified

When studying how some event or policy affects a market,elasticity provides information on the

Correct Answer
verified

Which of the following statements is not correct concerning government attempts to reduce the flow of illegal drugs into the country? Drug interdiction

Correct Answer
verified

Exam 5: Elasticity and Its Application

Reta's income elasticity of demand for steak dinners is 1.50.All else equal,this means that if her income increases by 20 percent,she will buy

Correct AnswerverifiedShow Answer

In which of the following situations will total revenue increase?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 5-18 -Refer to Figure 5-18.Which supply curve represents perfectly inelastic supply?

Correct AnswerverifiedShow Answer

Figure 5-4 -Refer to Figure 5-4.The section of the demand curve from A to B represents the

Correct AnswerverifiedShow Answer

Goods with close substitutes tend to have more elastic demands than do goods without close substitutes.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the quantity supplied responds only slightly to changes in price,then

Correct AnswerverifiedShow Answer

Figure 5-13 -Refer to Figure 5-13.Using the midpoint method,what is the price elasticity of supply between $16 and $40?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 5-2 -Refer to Figure 5-2.As price falls from Pa to Pb,we could use the three demand curves to calculate three different values of the price elasticity of demand.Which of the three demand curves would produce the smallest elasticity?

Correct AnswerverifiedShow Answer

If the income elasticity of demand for a good is 0.56,is the good a normal or inferior good?

Correct AnswerverifiedThe good i...View AnswerShow Answer

For which pairs of goods is the cross-price elasticity most likely to be positive?

Correct AnswerverifiedShow Answer

Figure 5-4 -Refer to Figure 5-4.The section of the demand curve at point B represents the

Correct AnswerverifiedShow Answer

If the demand for apples is elastic,then an increase in the price of apples will

Correct AnswerverifiedShow Answer

Table 5-3 The following table shows the demand schedule for a particular good. -Refer to Table 5-3.Using the midpoint method,what is the price elasticity of demand when price rises from $9 to $12?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Supply tends to be more elastic in the short run and more inelastic in the long run.

Correct AnswerverifiedShow Answer

When studying how some event or policy affects a market,elasticity provides information on the

Correct AnswerverifiedShow Answer

Which of the following statements is not correct concerning government attempts to reduce the flow of illegal drugs into the country? Drug interdiction

Correct AnswerverifiedShow Answer

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The good i...
View Answer

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