Question 1

Figure 5-17

-Refer to Figure 5-17.Which of the following statements is not correct?

Accepted Answer

A)   Supply curve A is perfectly inelastic.
B)   Supply curve B is perfectly elastic.
C)   Supply curve C is unit elastic.
D)   Supply curve D is more elastic than supply curve C.E) A) and B)
F) None of the above

Question 2

Scenario 5-3
Milk has an inelastic demand, and beef has an elastic demand. Suppose that a mysterious increase in bovine infertility decreases both the population of dairy cows and the population of beef cattle by 50 percent.
-Refer to Scenario 5-3.The equilibrium price will

Accepted Answer

A)   increase in both the milk and beef markets.
B)   increase in the milk market and decrease in the beef market.
C)   decrease in the milk market and increase in the beef market.
D)   decrease in both the milk and beef markets.E) A) and B)
F) A) and C)

Question 3

When the price of knee braces increased by 25 percent,the Brace Yourself Company increased its quantity supplied of knee braces per week by 75 percent.BYC's price elasticity of supply of knee braces is 0.33.

Accepted Answer

A) True 
 B)False

Question 4

The federal government is concerned about obesity in the United States.Congress is considering two plans.One will ban the production and sale of "junk food." The other will increase nutrition-education programs and include substantial advertising campaigns to encourage healthy eating habits.The junk-food ban program

Accepted Answer

A)   and the education program will reduce the quantity of junk food sold and raise the price.
B)   and the education program will reduce the quantity of junk food sold and lower the price.
C)   will reduce the quantity of junk food sold and raise the price. The education program will reduce the quantity of junk food sold and lower the price.
D)   will reduce the quantity of junk food sold and lower the price. The education program will reduce the quantity of junk food sold and raise the price.E) B) and C)
F) A) and D)

Question 5

If the income elasticity of demand for a good is negative,then the good must be an inferior good.

Accepted Answer

A) True 
 B)False

Question 6

At price of $1.20,a local pencil manufacturer is willing to supply 150 boxes per day.At a price of $1.40,the manufacturer is willing to supply 170 boxes per day.Using the midpoint method,the price elasticity of supply is about

Accepted Answer

A)   2.0.
B)   1.23.
C)   1.00.
D)   0.81.E) A) and B)
F) All of the above

Question 7

The flatter the demand curve through a given point,the

Accepted Answer

A)   greater the price elasticity of demand at that point.
B)   smaller the price elasticity of demand at that point.
C)   closer the price elasticity of demand will be to the slope of the curve.
D)   greater the absolute value of the change in total revenue when there is a movement from that point upward and to the left along the demand curve.E) B) and C)
F) A) and B)

Question 8

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

Accepted Answer

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

Question 9

If a t-shirt manufacturer supplies 1,000 t-shirts per week when the price of t-shirts is $10 and supplies 1,200 t-shirts per week when the price of t-shirts is $12,the price elasticity of supply is 2.

Accepted Answer

A) True 
 B)False

Question 10

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

Question 11

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

Accepted Answer

A)   subscriptions to premium movie channels through the local cable television provider
B)   hi-definition DVD players
C)   champagne
D)   housingE) A) and C)
F) B) and D)

Question 12

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

Accepted Answer

A)   mint-flavored toothpaste
B)   toothpaste
C)   Colgate mint-flavored toothpaste
D)   a generic mint-flavored toothpasteE) A) and B)
F) A) and C)

Question 13

Supply is said to be inelastic if the quantity supplied responds substantially to changes in the price and elastic if the quantity supplied responds only slightly to price.

Accepted Answer

A) True 
 B)False

Question 14

Suppose a producer is able to separate customers into two groups,one having an inelastic demand and the other having an elastic demand.If the producer's objective is to increase total revenue,she should

Accepted Answer

A)   increase the price charged to customers with the elastic demand and decrease the price charged to customers with the inelastic demand.
B)   decrease the price charged to customers with the elastic demand and increase the price charged to customers with the inelastic demand.
C)   decrease the price to both groups of customers.
D)   increase the price for both groups of customers.E) A) and B)
F) C) and D)

Question 15

Figure 5-10
 
-Refer to Figure 5-10.When price falls from $50 to $40,demand is

Accepted Answer

A)   inelastic, since total revenue decreases from $8,000 to $5,000.
B)   inelastic, since total revenue increases from $5,000 to $8,000.
C)   elastic, since total revenue increases from $5,000 to $8,000.
D)   unit elastic, since total revenue does not change.E) B) and D)
F) None of the above

Question 16

Which of the following statements about the consumers' responses to rising gasoline prices is correct?

Accepted Answer

A)   About 10 percent of the long-run reduction in quantity demanded arises because people drive less and about 90 percent arises because they switch to more fuel-efficient cars.
B)   About 90 percent of the long-run reduction in quantity demanded arises because people drive less and about 10 percent arises because they switch to more fuel-efficient cars.
C)   About half of the long-run reduction in quantity demanded arises because people drive less and about half arises because they switch to more fuel-efficient cars.
D)   Because gasoline is a necessity, consumers do not decrease their quantity demanded in either the short run or the long run.E) C) and D)
F) None of the above

Question 17

Figure 5-5
 
-Refer to Figure 5-5.At a price of $12 per unit,sellers' total revenue equals

Accepted Answer

A)   $150.
B)   $200.
C)   $288.
D)   $364.E) B) and C)
F) A) and D)

Question 18

If the demand for donuts is elastic,then a decrease in the price of donuts will

Accepted Answer

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

Question 19

The midpoint method is used to calculate elasticity between two points because it gives the same answer regardless of the direction of the change.

Accepted Answer

A) True 
 B)False

Question 20

At price of $1.30 per pound,a local apple orchard is willing to supply 150 pounds of apples per day.At a price of $1.50 per pound,the orchard is willing to supply 170 pounds of apples per day.Using the midpoint method,the price elasticity of supply is about

Accepted Answer

A)   1.14.
B)   1.00.
C)   0.875.
D)   0.50.E) A) and D)
F) All of the above

Exam 5: Elasticity and Its Application

Suppose a producer is able to separate customers into two groups,one having an inelastic demand and the other having an elastic demand.If the producer's objective is to increase total revenue,she should

Correct Answer
verified

Figure 5-10 -Refer to Figure 5-10.When price falls from $50 to $40,demand is

Correct Answer
verified

If the income elasticity of demand for a good is negative,then the good must be an inferior good.

Correct Answer
verified

The midpoint method is used to calculate elasticity between two points because it gives the same answer regardless of the direction of the change.

Correct Answer
verified

When the price of knee braces increased by 25 percent,the Brace Yourself Company increased its quantity supplied of knee braces per week by 75 percent.BYC's price elasticity of supply of knee braces is 0.33.

Correct Answer
verified

If the demand for donuts is elastic,then a decrease in the price of donuts will

Correct Answer
verified

At price of $1.20,a local pencil manufacturer is willing to supply 150 boxes per day.At a price of $1.40,the manufacturer is willing to supply 170 boxes per day.Using the midpoint method,the price elasticity of supply is about

Correct Answer
verified

Figure 5-5 -Refer to Figure 5-5.At a price of $12 per unit,sellers' total revenue equals

Correct Answer
verified

Which of the following statements about the consumers' responses to rising gasoline prices is correct?

Correct Answer
verified

Figure 5-17 -Refer to Figure 5-17.Which of the following statements is not correct?

Correct Answer
verified

At price of $1.30 per pound,a local apple orchard is willing to supply 150 pounds of apples per day.At a price of $1.50 per pound,the orchard is willing to supply 170 pounds of apples per day.Using the midpoint method,the price elasticity of supply is about

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

If a t-shirt manufacturer supplies 1,000 t-shirts per week when the price of t-shirts is $10 and supplies 1,200 t-shirts per week when the price of t-shirts is $12,the price elasticity of supply is 2.

Correct Answer
verified

Supply is said to be inelastic if the quantity supplied responds substantially to changes in the price and elastic if the quantity supplied responds only slightly to price.

Correct Answer
verified

Scenario 5-3 Milk has an inelastic demand, and beef has an elastic demand. Suppose that a mysterious increase in bovine infertility decreases both the population of dairy cows and the population of beef cattle by 50 percent. -Refer to Scenario 5-3.The equilibrium price will

Correct Answer
verified

The flatter the demand curve through a given point,the

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Exam 5: Elasticity and Its Application

Suppose a producer is able to separate customers into two groups,one having an inelastic demand and the other having an elastic demand.If the producer's objective is to increase total revenue,she should

Correct AnswerverifiedShow Answer

Figure 5-10 -Refer to Figure 5-10.When price falls from $50 to $40,demand is

Correct AnswerverifiedShow Answer

If the income elasticity of demand for a good is negative,then the good must be an inferior good.

Correct AnswerverifiedShow Answer

The midpoint method is used to calculate elasticity between two points because it gives the same answer regardless of the direction of the change.

Correct AnswerverifiedShow Answer

When the price of knee braces increased by 25 percent,the Brace Yourself Company increased its quantity supplied of knee braces per week by 75 percent.BYC's price elasticity of supply of knee braces is 0.33.

Correct AnswerverifiedShow Answer

If the demand for donuts is elastic,then a decrease in the price of donuts will

Correct AnswerverifiedShow Answer

At price of $1.20,a local pencil manufacturer is willing to supply 150 boxes per day.At a price of $1.40,the manufacturer is willing to supply 170 boxes per day.Using the midpoint method,the price elasticity of supply is about

Correct AnswerverifiedShow Answer

Figure 5-5 -Refer to Figure 5-5.At a price of $12 per unit,sellers' total revenue equals

Correct AnswerverifiedShow Answer

Which of the following statements about the consumers' responses to rising gasoline prices is correct?

Correct AnswerverifiedShow Answer

Figure 5-17 -Refer to Figure 5-17.Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

At price of $1.30 per pound,a local apple orchard is willing to supply 150 pounds of apples per day.At a price of $1.50 per pound,the orchard is willing to supply 170 pounds of apples per day.Using the midpoint method,the price elasticity of supply is about

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If a t-shirt manufacturer supplies 1,000 t-shirts per week when the price of t-shirts is $10 and supplies 1,200 t-shirts per week when the price of t-shirts is $12,the price elasticity of supply is 2.

Correct AnswerverifiedShow Answer

Supply is said to be inelastic if the quantity supplied responds substantially to changes in the price and elastic if the quantity supplied responds only slightly to price.

Correct AnswerverifiedShow Answer

Scenario 5-3 Milk has an inelastic demand, and beef has an elastic demand. Suppose that a mysterious increase in bovine infertility decreases both the population of dairy cows and the population of beef cattle by 50 percent. -Refer to Scenario 5-3.The equilibrium price will

Correct AnswerverifiedShow Answer

The flatter the demand curve through a given point,the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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