Question 1

Table 5-2
   Priea  Quintit $1000$8010$6020$4030$2040$050\begin{array} { | l | l | } \hline 	ext { Priea } & 	ext { Quintit } \\hline \$ 100 & 0 \\hline \$ 80 & 10 \\hline \$ 60 & 20 \\hline \$ 40 & 30 \\hline \$ 20 & 40 \\hline \$ 0 & 50 \\hline\end{array} Priea $100$80$60$40$20$0​ Quintit 01020304050​​ 
-Refer to Table 5-2. Using the midpoint method, if the price falls from $60 to $40, the absolute value of the price elasticity of demand is

Accepted Answer

A)   0.4.
B)   1.
C)   4.
D)   20. E) All of the above
F) B) and D)

Question 2

Table 5-5
 
-Refer to Table 5-5. Along which of the supply curves does quantity supplied move proportionately more than the price?

Accepted Answer

A)  along supply curve B only
B)  along supply curves B and C
C)  along all three supply curves
D)  None. Quantity supplied moves proportionately less than the price along all of the three supply curves.E) All of the above
F) None of the above

Question 3

Which of the following should be held constant when calculating an income elasticity of demand?

Accepted Answer

A)  the quantity of the good demanded
B)  the price of the good
C)  income
D)  All of the above should be held constant.E) A) and B)
F) A) and C)

Question 4

Holding all other forces constant, if increasing the price of a good leads to a decrease in total revenue, then the demand for the good must be

Accepted Answer

A)  unit elastic.
B)  inelastic.
C)  elastic.
D)  None of the above is correct because a price increase always leads to an increase in total revenue.E) None of the above
F) A) and B)

Question 5

Drug interdiction, which reduces the supply of drugs, may decrease drug-related crime because the demand for drugs is inelastic.

Accepted Answer

A) True 
 B)False

Question 6

Figure 5-9 1 and P2, and the corresponding quantities demanded, Q1 and Q2, for the purpose of calculating the price elasticity of demand. Also suppose P2 > P1. In which of the following cases could we possibly find that (i)  demand is elastic and (ii)  an increase in price from P1 to P2 causes an increase in total revenue? A) 0 1 2 1 2 1 > $15. D) None of the above is correct." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 5-9. Suppose this demand curve is a straight, downward-sloping line all the way from the horizontal intercept to the vertical intercept. We choose two prices, P1 and P2, and the corresponding quantities demanded, Q1 and Q2, for the purpose of calculating the price elasticity of demand. Also suppose P2 > P1. In which of the following cases could we possibly find that (i)  demand is elastic and (ii)  an increase in price from P1 to P2 causes an increase in total revenue?

Accepted Answer

A)  0 1 2 
B)  $10 1 2 
C)  P1 > $15.
D)  None of the above is correct.E) None of the above
F) A) and C)

Question 7

An increase in the price of cheese crackers from $2.25 to $2.45 per box causes suppliers of cheese crackers to increase their quantity supplied from 125 boxes per minute to 145 boxes per minute. Using the midpoint method, supply is

Accepted Answer

A)  elastic, and the price elasticity of supply is 1.74.
B)  elastic, and the price elasticity of supply is 0.57.
C)  inelastic, and the price elasticity of supply is 1.74.
D)  inelastic, and the price elasticity of supply is 0.57.E) All of the above
F) A) and B)

Question 8

Drug interdiction, which reduces the supply of drugs, will likely be a less effective policy than educating consumers to reduce their demand for drugs because the drug interdiction policy will lower drug prices and reduce the quantity of drugs demanded.

Accepted Answer

A) True 
 B)False

Question 9

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) None of the above

Question 10

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

Accepted Answer

A)  white chocolate chip with macadamia nut cookies
B)  Mrs. Field's chocolate chip cookies
C)  milk chocolate chip cookies
D)  cookiesE) B) and C)
F) C) and D)

Question 11

Suppose good X has a positive income elasticity of demand. This implies that good X could be (i) 
A normal good.(ii) 
A necessity.(iii) 
An inferior good.(iv) 
A luxury.

Accepted Answer

A)  (i)  only
B)  (i)  and (ii)  only
C)  (i) , (ii) , and (iv)  only
D)  (iii)  onlyE) None of the above
F) All of the above

Question 12

Holding all other forces constant, if decreasing the price of a good leads to an increase in total revenue, then the demand for the good must be

Accepted Answer

A)  unit elastic.
B)  inelastic.
C)  elastic.
D)  None of the above is correct because a price increase always leads to an increase in total revenue.E) None of the above
F) All of the above

Question 13

Figure 5-16 
-Refer to Figure 5-16. Using the midpoint method, what is the price elasticity of supply between point A and point B?

Accepted Answer

A)  0.58
B)  0.71
C)  1.06
D)  1.4E) A) and B)
F) A) and C)

Question 14

When the Shaffers had a monthly income of $4,000, they usually ate out 8 times a month. Now that the couple makes $4,500 a month, they eat out 10 times a month. Compute the couple's income elasticity of demand using the midpoint method. Explain your answer. Is a restaurant meal a normal or inferior good to the couple?

Accepted Answer

The income elasticity of deman...

Question 15

If the cross-price elasticity of demand for two goods is 1.25, then

Accepted Answer

A)  the two goods are luxuries.
B)  the two goods are substitutes.
C)  one of the goods is normal and the other good is inferior.
D)  the demand for one of the goods conforms to the law of demand, but the demand for the other good violates the law of demand.E) B) and D)
F) A) and B)

Question 16

Figure 5-14 
-Refer to Figure 5-14. Using the midpoint method, what is the price elasticity of supply between points D and G?

Accepted Answer

A)  1.89
B)  1.26
C)  0.53
D)  0.34E) B) and C)
F) A) and D)

Question 17

Table 5-4
   Prica  Tatal  Revenup $10$100$12$108$14$112$16$112\begin{array} { | c | c } \hline 	ext { Prica } & \begin{array} { c } 	ext { Tatal } \	ext { Revenup }\end{array} \\hline \$ 10 & \$ 100 \\hline \$ 12 & \$ 108 \\hline \$ 14 & \$ 112 \\hline \$ 16 & \$ 112 \\hline\end{array} Prica $10$12$14$16​ Tatal  Revenup ​$100$108$112$112​​ 
-Refer to Table 5-4. As price rises from $10 to $12, the price elasticity of demand using the midpoint method is approximately

Accepted Answer

A)  0.08.
B)  0.18.
C)  0.42.
D)  0.58. E) None of the above
F) All of the above

Question 18

If we observe that when the price of chocolate decreases by 10%, quantity demanded increases by 25%, then the demand for chocolate is price elastic.

Accepted Answer

A) True 
 B)False

Question 19

If the price elasticity of demand for a good is 1.5, then a 3 percent decrease in price results in a

Accepted Answer

A)  0.5 percent increase in the quantity demanded.
B)  2 percent increase in the quantity demanded.
C)  4.5 percent increase in the quantity demanded.
D)  5 percent increase in the quantity demanded.E) C) and D)
F) A) and B)

Question 20

Elasticity measures how responsive quantity is to changes in price.

Accepted Answer

A) True 
 B)False

Exam 5: Elasticity and Its Application

Correct Answer
verified
The income elasticity of deman...
View Answer

If the cross-price elasticity of demand for two goods is 1.25, then

Correct Answer
verified

Elasticity measures how responsive quantity is to changes in price.

Correct Answer
verified

Drug interdiction, which reduces the supply of drugs, may decrease drug-related crime because the demand for drugs is inelastic.

Correct Answer
verified

Holding all other forces constant, if decreasing the price of a good leads to an increase in total revenue, then the demand for the good must be

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

If we observe that when the price of chocolate decreases by 10%, quantity demanded increases by 25%, then the demand for chocolate is price elastic.

Correct Answer
verified

Table 5-5 -Refer to Table 5-5. Along which of the supply curves does quantity supplied move proportionately more than the price?

Correct Answer
verified

Correct Answer
verified

Holding all other forces constant, if increasing the price of a good leads to a decrease in total revenue, then the demand for the good must be

Correct Answer
verified

Which of the following should be held constant when calculating an income elasticity of demand?

Correct Answer
verified

Drug interdiction, which reduces the supply of drugs, will likely be a less effective policy than educating consumers to reduce their demand for drugs because the drug interdiction policy will lower drug prices and reduce the quantity of drugs demanded.

Correct Answer
verified

If the price elasticity of demand for a good is 1.5, then a 3 percent decrease in price results in a

Correct Answer
verified

Suppose good X has a positive income elasticity of demand. This implies that good X could be (i) A normal good.(ii) A necessity.(iii) An inferior good.(iv) A luxury.

Correct Answer
verified

An increase in the price of cheese crackers from $2.25 to $2.45 per box causes suppliers of cheese crackers to increase their quantity supplied from 125 boxes per minute to 145 boxes per minute. Using the midpoint method, supply is

Correct Answer
verified

Figure 5-16 -Refer to Figure 5-16. Using the midpoint method, what is the price elasticity of supply between point A and point B?

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Figure 5-14 -Refer to Figure 5-14. Using the midpoint method, what is the price elasticity of supply between points D and G?

Correct Answer
verified

Exam 5: Elasticity and Its Application

Correct AnswerverifiedThe income elasticity of deman...View AnswerShow Answer

If the cross-price elasticity of demand for two goods is 1.25, then

Correct AnswerverifiedShow Answer

Elasticity measures how responsive quantity is to changes in price.

Correct AnswerverifiedShow Answer

Drug interdiction, which reduces the supply of drugs, may decrease drug-related crime because the demand for drugs is inelastic.

Correct AnswerverifiedShow Answer

Holding all other forces constant, if decreasing the price of a good leads to an increase in total revenue, then the demand for the good must be

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If we observe that when the price of chocolate decreases by 10%, quantity demanded increases by 25%, then the demand for chocolate is price elastic.

Correct AnswerverifiedShow Answer

Table 5-5 -Refer to Table 5-5. Along which of the supply curves does quantity supplied move proportionately more than the price?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Holding all other forces constant, if increasing the price of a good leads to a decrease in total revenue, then the demand for the good must be

Correct AnswerverifiedShow Answer

Which of the following should be held constant when calculating an income elasticity of demand?

Correct AnswerverifiedShow Answer

Drug interdiction, which reduces the supply of drugs, will likely be a less effective policy than educating consumers to reduce their demand for drugs because the drug interdiction policy will lower drug prices and reduce the quantity of drugs demanded.

Correct AnswerverifiedShow Answer

If the price elasticity of demand for a good is 1.5, then a 3 percent decrease in price results in a

Correct AnswerverifiedShow Answer

Suppose good X has a positive income elasticity of demand. This implies that good X could be (i) A normal good.(ii) A necessity.(iii) An inferior good.(iv) A luxury.

Correct AnswerverifiedShow Answer

An increase in the price of cheese crackers from $2.25 to $2.45 per box causes suppliers of cheese crackers to increase their quantity supplied from 125 boxes per minute to 145 boxes per minute. Using the midpoint method, supply is

Correct AnswerverifiedShow Answer

Figure 5-16 -Refer to Figure 5-16. Using the midpoint method, what is the price elasticity of supply between point A and point B?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 5-14 -Refer to Figure 5-14. Using the midpoint method, what is the price elasticity of supply between points D and G?

Correct AnswerverifiedShow Answer

Correct Answer
verified
The income elasticity of deman...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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