Question 1

Figure 5-4 
-Refer to Figure 5-4. If the price decreases in the region of the demand curve between points A and B, we can expect total revenue to

Accepted Answer

A)   increase.
B)   stay the same.
C)   decrease.
D)   first decrease, then increase until total revenue is maximized.E) None of the above
F) B) and C)

Question 2

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

Question 3

Table 5-12
 
-Refer to Table 5-12. Using the midpoint method, what is the price elasticity of demand between $6 and $8?

Accepted Answer

The price ...

Question 4

Economists compute the price elasticity of demand as the

Accepted Answer

A)   percentage change in price divided by the percentage change in quantity demanded.
B)   change in quantity demanded divided by the change in the price.
C)   percentage change in quantity demanded divided by the percentage change in price.
D)   percentage change in quantity demanded divided by the percentage change in income.E) A) and C)
F) B) and C)

Question 5

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

Accepted Answer

A)   elastic section of the demand curve.
B)   perfectly elastic section of the demand curve.
C)   unit elastic section of the demand curve.
D)   inelastic section of the demand curve.E) B) and D)
F) None of the above

Question 6

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) All of the above

Question 7

Necessities such as food and clothing tend to have

Accepted Answer

A)   high price elasticities of demand and high income elasticities of demand.
B)   high price elasticities of demand and low income elasticities of demand.
C)   low price elasticities of demand and high income elasticities of demand.
D)   low price elasticities of demand and low income elasticities of demand.E) None of the above
F) A) and B)

Question 8

Figure 5-1 
-Refer to Figure 5-1. Between point A and point B, price elasticity of demand is equal to

Accepted Answer

A)   0.33.
B)   0.67.
C)   1.5
D)   2.67.E) All of the above
F) B) and C)

Question 9

If the demand for textbooks is inelastic, then an increase in the price of textbooks will

Accepted Answer

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

Question 10

Suppose that good X is a luxury and that good Y is a necessity. Which good would you expect to have more price elastic demand?

Accepted Answer

The answer of Suppose that good X is a luxury...

Question 11

Figure 5-21 
-Refer to Figure 5-21. Using the midpoint method, what is the price elasticity of supply between $15 and $25?

Accepted Answer

The price ...

Question 12

Table 5-2
 
-Refer to Table 5-2. Using the midpoint method, if the price falls from $200 to $150, the price elasticity of demand is

Accepted Answer

A)   zero.
B)   unit elastic.
C)   inelastic.
D)   elastid.E) B) and C)
F) C) and D)

Question 13

Because the demand for wheat tends to be inelastic, the development of a new, more productive hybrid wheat would tend to

Accepted Answer

A)   increase the total revenue of wheat farmers.
B)   decrease the total revenue of wheat farmers.
C)   decrease the demand for wheat.
D)   decrease the supply of wheat.E) None of the above
F) All of the above

Question 14

Suppose demand is given by the equation:  Using the midpoint method, what is the price elasticity of demand between $7 and $8?

Accepted Answer

The price ...

Question 15

Figure 5-3 
-Refer to Figure 5-3. Which demand curve is unit elastic?

Accepted Answer

A)   A
B)   B
C)   D
D)   None of the above.E) A) and B)
F) A) and C)

Question 16

For which of the following goods is the income elasticity of demand likely lowest?

Accepted Answer

A)   water
B)   sapphire pendant necklaces
C)   filet mignon steaks
D)   fresh fruitE) All of the above
F) B) and D)

Question 17

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 18

Price elasticity of supply measures how much the quantity supplied responds to changes in the price.

Accepted Answer

A) True 
 B)False

Question 19

The demand for grape-flavored Hubba Bubba bubble gum is likely

Accepted Answer

A)   inelastic because there are many close substitutes for grape-flavored Hubba Bubba .
B)   elastic because there are many close substitutes for grape-flavored Hubba Bubbb.
C)   inelastic because the market is broadly defined.
D)   elastic because the market is broadly defined.E) A) and B)
F) C) and D)

Question 20

Scenario 5-8
Consider the markets for mobile and landline telephone service. Suppose that when the average income of residents of Plainville is $55,000 per year, the quantity demanded of landline telephone service is 12,500 and the quantity demanded of mobile service is 28,000. Suppose that when the price of mobile service rises from $100 to $120 per month, the quantity demanded of landline service decreases to 11,000. Suppose also that when the average income increases to $60,000, the quantity demanded of mobile service increases to 33,000.
-Refer to Scenario 5-8. Using the midpoint method, what is the income elasticity of demand for mobile service?

Accepted Answer

The answer of Scenario 5-8
Consider the markets for mobile and...

Exam 5: Elasticity and Its Application

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Figure 5-3 -Refer to Figure 5-3. Which demand curve is unit elastic?

Correct Answer
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Figure 5-21 -Refer to Figure 5-21. Using the midpoint method, what is the price elasticity of supply between $15 and $25?

Correct Answer
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The price ...
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Price elasticity of supply measures how much the quantity supplied responds to changes in the price.

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

Correct Answer
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Suppose that good X is a luxury and that good Y is a necessity. Which good would you expect to have more price elastic demand?

Correct Answer
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Figure 5-1 -Refer to Figure 5-1. Between point A and point B, price elasticity of demand is equal to

Correct Answer
verified

The demand for grape-flavored Hubba Bubba bubble gum is likely

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

Economists compute the price elasticity of demand as the

Correct Answer
verified

For which of the following goods is the income elasticity of demand likely lowest?

Correct Answer
verified

Because the demand for wheat tends to be inelastic, the development of a new, more productive hybrid wheat would tend to

Correct Answer
verified

Table 5-12 -Refer to Table 5-12. Using the midpoint method, what is the price elasticity of demand between $6 and $8?

Correct Answer
verified
The price ...
View Answer

If the demand for textbooks is inelastic, then an increase in the price of textbooks will

Correct Answer
verified

Figure 5-4 -Refer to Figure 5-4. If the price decreases in the region of the demand curve between points A and B, we can expect total revenue to

Correct Answer
verified

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

Correct Answer
verified

Table 5-2 -Refer to Table 5-2. Using the midpoint method, if the price falls from $200 to $150, the price elasticity of demand is

Correct Answer
verified

Suppose demand is given by the equation: Using the midpoint method, what is the price elasticity of demand between $7 and $8?

Correct Answer
verified
The price ...
View Answer

Necessities such as food and clothing tend to have

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

Exam 5: Elasticity and Its Application

Correct AnswerverifiedShow Answer

Figure 5-3 -Refer to Figure 5-3. Which demand curve is unit elastic?

Correct AnswerverifiedShow Answer

Figure 5-21 -Refer to Figure 5-21. Using the midpoint method, what is the price elasticity of supply between $15 and $25?

Correct AnswerverifiedThe price ...View AnswerShow Answer

Price elasticity of supply measures how much the quantity supplied responds to changes in the price.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose that good X is a luxury and that good Y is a necessity. Which good would you expect to have more price elastic demand?

Correct AnswerverifiedShow Answer

Figure 5-1 -Refer to Figure 5-1. Between point A and point B, price elasticity of demand is equal to

Correct AnswerverifiedShow Answer

The demand for grape-flavored Hubba Bubba bubble gum is likely

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

Economists compute the price elasticity of demand as the

Correct AnswerverifiedShow Answer

For which of the following goods is the income elasticity of demand likely lowest?

Correct AnswerverifiedShow Answer

Because the demand for wheat tends to be inelastic, the development of a new, more productive hybrid wheat would tend to

Correct AnswerverifiedShow Answer

Table 5-12 -Refer to Table 5-12. Using the midpoint method, what is the price elasticity of demand between $6 and $8?

Correct AnswerverifiedThe price ...View AnswerShow Answer

If the demand for textbooks is inelastic, then an increase in the price of textbooks will

Correct AnswerverifiedShow Answer

Figure 5-4 -Refer to Figure 5-4. If the price decreases in the region of the demand curve between points A and B, we can expect total revenue to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Table 5-2 -Refer to Table 5-2. Using the midpoint method, if the price falls from $200 to $150, the price elasticity of demand is

Correct AnswerverifiedShow Answer

Suppose demand is given by the equation: Using the midpoint method, what is the price elasticity of demand between $7 and $8?

Correct AnswerverifiedThe price ...View AnswerShow Answer

Necessities such as food and clothing tend to have

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

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The price ...
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The price ...
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The price ...
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