Question 1

The price elasticity of demand for mobile phones

Accepted Answer

A) will be higher if there is an improvement in the production technology. 
B) will be lower if consumers perceive mobile phones to be a necessity. 
C) is computed as the percentage change in the price of mobile phones divided by the percentage change in quantity of mobile phones. 
D) All of the above are correct. 
A) will be higher if there is an improvement in the production technology. 
B) will be lower if consumers perceive mobile phones to be a necessity. 
C) is computed as the percentage change in the price of mobile phones divided by the percentage change in quantity of mobile phones. 
D) All of the above are correct.

Question 2

Figure 5-14  
-Refer to Figure 5-14. 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) 2.5 
A) 0.125 
B) 0.86 
C) 1.0 
D) 2.5

Question 3

Table 5-2  
-Refer to Table 5-2. Using the midpoint method, if the price falls from $150 to $100, the absolute value of the price elasticity of demand is

Accepted Answer

A) 0.4. 
B) 0.9. 
C) 1.1. 
D) 2. 
A) 0.4. 
B) 0.9. 
C) 1.1. 
D) 2.

Question 4

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

Accepted Answer

A) natural gas 
B) doctor's visits 
C) hamburgers 
D) boats 
A) natural gas 
B) doctor's visits 
C) hamburgers 
D) boats

Question 5

OPEC failed to maintain a high price of oil in the long run, partly because both the supply of oil and the demand for oil are more elastic in the long run than in the short run.

Accepted Answer

A) True 
 B)False

Question 6

Table 5-9
​  
-Refer to Table 5-9. Which of the three supply curves represents the least elastic supply?

Accepted Answer

A) supply curve A 
B) supply curve B 
C) supply curve C 
D) There is no difference in the elasticity of the three supply curves. 
A) supply curve A 
B) supply curve B 
C) supply curve C 
D) There is no difference in the elasticity of the three supply curves.

Question 7

Even the demand for a necessity such as gasoline will respond to a change in price, especially over a longer time horizon.

Accepted Answer

A) True 
 B)False

Question 8

There are fewer farmers in the United States today than 200 years ago because of

Accepted Answer

A) improvements in farm technology. 
B) increased government regulations in farming. 
C) an elastic demand for food. 
D) environmental programs designed to reduce soil erosion. 
A) improvements in farm technology. 
B) increased government regulations in farming. 
C) an elastic demand for food. 
D) environmental programs designed to reduce soil erosion.

Question 9

The discovery of a new hybrid wheat would increase the supply of wheat. As a result, wheat farmers would realize an increase in total revenue if the

Accepted Answer

A) supply of wheat is elastic. 
B) supply of wheat is inelastic. 
C) demand for wheat is inelastic. 
D) demand for wheat is elastic. 
A) supply of wheat is elastic. 
B) supply of wheat is inelastic. 
C) demand for wheat is inelastic. 
D) demand for wheat is elastic.

Question 10

Measures of elasticity enhance our ability to study the magnitudes of changes in quantities in response to changes in prices or income.

Accepted Answer

A) True 
 B)False

Question 11

Suppose the point (Q = 3,400, P = $20) is the midpoint on a certain downward-sloping, linear demand curve. Then

Accepted Answer

A) a decrease in price from $18 to $16 will increase total revenue. 
B) a decrease in price from $24 to $22 will decrease total revenue. 
C) a decrease in the price from $21 to $19 will decrease total revenue. 
D) the maximum value of total revenue is $68,000. 
A) a decrease in price from $18 to $16 will increase total revenue. 
B) a decrease in price from $24 to $22 will decrease total revenue. 
C) a decrease in the price from $21 to $19 will decrease total revenue. 
D) the maximum value of total revenue is $68,000.

Question 12

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. 
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.

Question 13

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

Accepted Answer

A) canoes and kayaks 
B) pizza and college textbooks 
C) Halloween candy and rain coats 
D) cats and cat food 
A) canoes and kayaks 
B) pizza and college textbooks 
C) Halloween candy and rain coats 
D) cats and cat food

Question 14

Figure 5-7  
-Refer to Figure 5-7. For prices below $5, demand is price

Accepted Answer

A) elastic, and raising price will increase total revenue. 
B) inelastic, and raising price will increase total revenue. 
C) elastic, and lowering price will increase total revenue. 
D) inelastic, and lowering price will increase total revenue. 
A) elastic, and raising price will increase total revenue. 
B) inelastic, and raising price will increase total revenue. 
C) elastic, and lowering price will increase total revenue. 
D) inelastic, and lowering price will increase total revenue.

Question 15

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 cream 
A) ice cream 
B) frozen yogurt 
C) vanilla ice cream 
D) Häagen-Dazs® vanilla bean ice cream

Question 16

Suppose that 300 bottles of soda are demanded at a particular price. If the price of a bottle of soda rises from that price by 6 percent, the number of bottles of soda demanded falls to 275. Using the midpoint approach to calculate the price elasticity of demand, it follows that the

Accepted Answer

A) demand for bottles of soda in this price range is perfectly elastic. 
B) price increase will increase the total revenue of soda sellers. 
C) price elasticity of demand for bottles of soda in this price range is about 0.69. 
D) price elasticity of demand for bottles of soda in this price range is about 1.45. 
A) demand for bottles of soda in this price range is perfectly elastic. 
B) price increase will increase the total revenue of soda sellers. 
C) price elasticity of demand for bottles of soda in this price range is about 0.69. 
D) price elasticity of demand for bottles of soda in this price range is about 1.45.

Question 17

The price elasticity of supply measures how responsive

Accepted Answer

A) equilibrium price is to equilibrium quantity. 
B) sellers are to a change in buyers' income. 
C) sellers are to a change in price. 
D) consumers are to the number of substitutes. 
A) equilibrium price is to equilibrium quantity. 
B) sellers are to a change in buyers' income. 
C) sellers are to a change in price. 
D) consumers are to the number of substitutes.

Question 18

Figure 5-9  
-Refer to Figure 5-9. If the price rises from point D to point C, total revenue

Accepted Answer

A) increases, and demand is price elastic. 
B) decreases, and demand is price elastic. 
C) increases, and demand is price inelastic. 
D) decreases, and demand is price inelastic. 
A) increases, and demand is price elastic. 
B) decreases, and demand is price elastic. 
C) increases, and demand is price inelastic. 
D) decreases, and demand is price inelastic.

Question 19

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. 
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.

Question 20

If the demand curve is linear and downward sloping, which of the following statements is not correct?

Accepted Answer

A) Demand is more elastic on the lower part of the demand curve than on the upper part. 
B) Different pairs of points on the demand curve can result in different values of the price elasticity of demand. 
C) Different pairs of points on the demand curve result in identical values of the slope of the demand curve. 
D) Starting from a point on the upper part of the demand curve, an increase in price leads to a decrease in total revenue. 
A) Demand is more elastic on the lower part of the demand curve than on the upper part. 
B) Different pairs of points on the demand curve can result in different values of the price elasticity of demand. 
C) Different pairs of points on the demand curve result in identical values of the slope of the demand curve. 
D) Starting from a point on the upper part of the demand curve, an increase in price leads to a decrease in total revenue.

Exam 5: Elasticity and Its Application

The price elasticity of demand for mobile phones

Figure 5-14 -Refer to Figure 5-14. Using the midpoint method, what is the price elasticity of supply between $16 and $40?

Table 5-2 -Refer to Table 5-2. Using the midpoint method, if the price falls from $150 to $100, the absolute value of the price elasticity of demand is

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

OPEC failed to maintain a high price of oil in the long run, partly because both the supply of oil and the demand for oil are more elastic in the long run than in the short run.

Table 5-9 ​ -Refer to Table 5-9. Which of the three supply curves represents the least elastic supply?

Even the demand for a necessity such as gasoline will respond to a change in price, especially over a longer time horizon.

There are fewer farmers in the United States today than 200 years ago because of

The discovery of a new hybrid wheat would increase the supply of wheat. As a result, wheat farmers would realize an increase in total revenue if the

Measures of elasticity enhance our ability to study the magnitudes of changes in quantities in response to changes in prices or income.

Suppose the point (Q = 3,400, P = $20) is the midpoint on a certain downward-sloping, linear demand curve. Then

For a good that is a necessity, demand

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

Figure 5-7 -Refer to Figure 5-7. For prices below $5, demand is price

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

Suppose that 300 bottles of soda are demanded at a particular price. If the price of a bottle of soda rises from that price by 6 percent, the number of bottles of soda demanded falls to 275. Using the midpoint approach to calculate the price elasticity of demand, it follows that the

The price elasticity of supply measures how responsive

Figure 5-9 -Refer to Figure 5-9. If the price rises from point D to point C, total revenue

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

If the demand curve is linear and downward sloping, which of the following statements is not correct?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Applications: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Measuring a Nation S Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters

Table 5-9 -Refer to Table 5-9. Which of the three supply curves represents the least elastic supply?