Question 1

If a firm that produces honey is facing elastic demand, then the firm would decrease price to increase revenue.

Accepted Answer

A) True 
 B)False

Question 2

If the price elasticity of supply is 0.8, and price increased by 21 percent, quantity supplied would

Accepted Answer

A) increase by 26.25 percent. 
B) increase by 16.80 percent. 
C) decrease by 26.25 percent. 
D) decrease by 16.80 percent. 
A) increase by 26.25 percent. 
B) increase by 16.80 percent. 
C) decrease by 26.25 percent. 
D) decrease by 16.80 percent.

Question 3

If we observe that when the price of chocolate increases by 10%, quantity demanded falls by 5%, then the demand for chocolate is price inelastic.

Accepted Answer

A) True 
 B)False

Question 4

Suppose the price of natural gas, a typical fuel for heating homes, rises in January in Alaska. Would you expect the price elasticity of demand for natural gas to more inelastic immediately after the price increase or at some point in the future?

Accepted Answer

The price elasticity

Question 5

Helen's Honey Hut supplies 20 jars of honey per week when the price of honey is $6 per jar and supplies 30 jars per week when the price of is $8 per jar, so the price elasticity of supply over this price range is 1.4.

Accepted Answer

A) True 
 B)False

Question 6

If the price elasticity of demand is equal to 1, then demand is unit elastic.

Accepted Answer

A) True 
 B)False

Question 7

Table 5-2
​
 $$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Price } \
\text { (Dollars per unit) }
\end{array} & \begin{array} { c } 
\text { Quantity Demanded } \
\text { (Units) }
\end{array} \
\hline 100 & 0 \
\hline 80 & 50 \
\hline 60 & 100 \
\hline 40 & 150 \
\hline 20 & 200 \
\hline 0 & 250 \
\hline
\end{array}$$
-Refer to Table 5-2. Using the midpoint method, if the price falls from $80 to $60, the price elasticity of demand is

Accepted Answer

A) zero. 
B) unit elastic. 
C) inelastic. 
D) elastic. 
A) zero. 
B) unit elastic. 
C) inelastic. 
D) elastic.

Question 8

Hailey says that she would smoke one pack of cigarettes each day regardless of the price. If she is telling the truth, Hailey's

Accepted Answer

A) demand for cigarettes is perfectly inelastic. 
B) price elasticity of demand for cigarettes is infinite. 
C) income elasticity of demand for cigarettes is 0. 
D) demand for cigarettes is unit elastic. 
A) demand for cigarettes is perfectly inelastic. 
B) price elasticity of demand for cigarettes is infinite. 
C) income elasticity of demand for cigarettes is 0. 
D) demand for cigarettes is unit elastic.

Question 9

Table 5-5
​
​
 $$\begin{array} { | c | c | } 
\hline \text { Price } & \text { Quantity Demanded } \
\hline \$ 0 & 50 \
\hline \$ 2 & 40 \
\hline \$ 4 & 30 \
\hline \$ 6 & 20 \
\hline 48 & 10 \
\hline
\end{array}$$
-Refer to Table 5-5. Between which two quantities listed is demand most elastic?

Accepted Answer

The answer of Table 5-5
​
​
 \[\begin{array} { | c |...

Question 10

Along the elastic portion of a linear demand curve, total revenue rises as price rises.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) Dental floss 
B) Milk 
C) Diamond earrings 
D) Salt 
A) Dental floss 
B) Milk 
C) Diamond earrings 
D) Salt

Question 12

If a supply curve is perfectly vertical, what is the value of the price elasticity of supply?

Accepted Answer

The answer of If a supply curve is perfectly vertical,...

Question 13

For which of the following goods would demand be most price elastic: a car, a sedan, a Honda sedan, a Honda Accord, a black Honda Accord?

Accepted Answer

a black Ho

Question 14

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 15

Elasticity measures how responsive quantity is to changes in price.

Accepted Answer

A) True 
 B)False

Question 16

If a 23 percent change in price results in a 21 percent change in quantity supplied, then the price elasticity of supply is about

Accepted Answer

A) 1.10, and supply is elastic. 
B) 1.10, and supply is inelastic. 
C) 0.91, and supply is inelastic. 
D) 0.91, and supply is elastic. 
A) 1.10, and supply is elastic. 
B) 1.10, and supply is inelastic. 
C) 0.91, and supply is inelastic. 
D) 0.91, and supply is elastic.

Question 17

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. 
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.

Question 18

Which of the following statements is not correct?

Accepted Answer

A) Advocates for drug-interdiction policies that reduce the supply of illegal drugs argue that the demand for illegal drugs may be more responsive in the long run than in the short run. 
B) The demand for illegal drugs is price inelastic. 
C) Drug interdiction efforts that reduce the supply of illegal drugs may increase drug-related crimes. 
D) The quantity of illegal drugs demanded is very responsive to changes in price. 
A) Advocates for drug-interdiction policies that reduce the supply of illegal drugs argue that the demand for illegal drugs may be more responsive in the long run than in the short run. 
B) The demand for illegal drugs is price inelastic. 
C) Drug interdiction efforts that reduce the supply of illegal drugs may increase drug-related crimes. 
D) The quantity of illegal drugs demanded is very responsive to changes in price.

Question 19

Figure 5-7
  
-Refer to Figure 5-7. Using the midpoint method, what is the price elasticity of supply between point B and point C?

Accepted Answer

A) 1.44 
B) 1.29 
C) 0.96 
D) 0.69 
A) 1.44 
B) 1.29 
C) 0.96 
D) 0.69

Question 20

A manufacturer produces 410 units when the market price is $8 per unit and produces 470 units when the market price is $10 per unit. Using the midpoint method, for this range of prices, the price elasticity of supply is about

Accepted Answer

A) 1.63. 
B) 0.14. 
C) 0.61. 
D) 0.22. 
A) 1.63. 
B) 0.14. 
C) 0.61. 
D) 0.22.

Exam 5: Elasticity and Its Application

If a firm that produces honey is facing elastic demand, then the firm would decrease price to increase revenue.

If the price elasticity of supply is 0.8, and price increased by 21 percent, quantity supplied would

If we observe that when the price of chocolate increases by 10%, quantity demanded falls by 5%, then the demand for chocolate is price inelastic.

Suppose the price of natural gas, a typical fuel for heating homes, rises in January in Alaska. Would you expect the price elasticity of demand for natural gas to more inelastic immediately after the price increase or at some point in the future?

Helen's Honey Hut supplies 20 jars of honey per week when the price of honey is $6 per jar and supplies 30 jars per week when the price of is $8 per jar, so the price elasticity of supply over this price range is 1.4.

If the price elasticity of demand is equal to 1, then demand is unit elastic.

Table 5-2 ​ Price (Dollars per unit) Quantity Demanded (Units) 100 0 80 50 60 100 40 150 20 200 0 250 -Refer to Table 5-2. Using the midpoint method, if the price falls from $80 to $60, the price elasticity of demand is

Hailey says that she would smoke one pack of cigarettes each day regardless of the price. If she is telling the truth, Hailey's

Table 5-5 ​ ​ Price Quantity Demanded \ 0 50 \ 2 40 \ 4 30 \ 6 20 48 10 -Refer to Table 5-5. Between which two quantities listed is demand most elastic?

Along the elastic portion of a linear demand curve, total revenue rises as price rises.

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

If a supply curve is perfectly vertical, what is the value of the price elasticity of supply?

For which of the following goods would demand be most price elastic: a car, a sedan, a Honda sedan, a Honda Accord, a black Honda Accord?

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?

Elasticity measures how responsive quantity is to changes in price.

If a 23 percent change in price results in a 21 percent change in quantity supplied, then the price elasticity of supply is about

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

Which of the following statements is not correct?

Figure 5-7 -Refer to Figure 5-7. Using the midpoint method, what is the price elasticity of supply between point B and point C?

A manufacturer produces 410 units when the market price is $8 per unit and produces 470 units when the market price is $10 per unit. Using the midpoint method, for this range of prices, the price elasticity of supply is about

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 Nations 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 5-2 Price (Dollars per unit) Quantity Demanded (Units) 100 0 80 50 60 100 40 150 20 200 0 250 -Refer to Table 5-2. Using the midpoint method, if the price falls from $80 to $60, the price elasticity of demand is

Table 5-5 Price Quantity Demanded \ 0 50 \ 2 40 \ 4 30 \ 6 20 48 10 -Refer to Table 5-5. Between which two quantities listed is demand most elastic?