Question 1

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

Accepted Answer

A) Peanut butter and jelly 
B) Bicycle frames and bicycle tires 
C) Pens and pencils 
D) Digital college textbooks and iPhones 
A) Peanut butter and jelly 
B) Bicycle frames and bicycle tires 
C) Pens and pencils 
D) Digital college textbooks and iPhones

Question 2

Suppose demand is given by the equation:
QD = 50 - 5P
Using the midpoint method, what is the price elasticity of demand between $7 and $8?

Accepted Answer

The price

Question 3

Normal goods have positive income elasticities of demand, while inferior goods have negative income elasticities of demand.

Accepted Answer

A) True 
 B)False

Question 4

Suppose the price elasticity of demand for a product is 0.5. If a supplier wants to increase revenue, what change should it make to price, if any?

Accepted Answer

The answer of Suppose the price elasticity of demand for...

Question 5

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

Accepted Answer

A) Water 
B) Boats 
C) Doctor's visits 
D) Shoes 
A) Water 
B) Boats 
C) Doctor's visits 
D) Shoes

Question 6

Suppose that good X has few close substitutes and that good Y has many close substitutes. Which good would you expect to have more price elastic demand?

Accepted Answer

The answer of Suppose that good X has few close...

Question 7

Scenario 5-4
​
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 5-6. Using the midpoint method, what is the income elasticity of demand for mobile service?

Accepted Answer

The answer of Scenario 5-4
​
Consider the markets for mobile and...

Question 8

If the price elasticity of supply is 0.7, and a price increase led to a 4.2 percent increase in quantity supplied, then the price increase is about

Accepted Answer

A) 0.17 percent. 
B) 2.94 percent. 
C) 6.00 percent. 
D) 5.00 percent. 
A) 0.17 percent. 
B) 2.94 percent. 
C) 6.00 percent. 
D) 5.00 percent.

Question 9

Table 5-6
Consider the following demand schedule.
 $$\begin{array} { | l | l | } 
\hline \text { Price } & \text { Quantity Demanded } \
\hline \$ 0 & 1,000 \
\hline \$ 3 & 800 \
\hline \$ 6 & 600 \
\hline \$ 9 & 400 \
\hline \$ 12 & 200 \
\hline \$ 15 & 0 \
\hline
\end{array}$$
-Refer to Table 5-6. Using the midpoint method, what is the price elasticity of demand between $12 and $15?

Accepted Answer

The answer of Table 5-6
Consider the following demand schedule.
 \[\begin{array}...

Question 10

The flatter the demand curve that passes through a given point, the more elastic the demand.

Accepted Answer

A) True 
 B)False

Question 11

The price elasticity of demand is defined as the percentage change in price divided by the percentage change in quantity demanded.

Accepted Answer

A) True 
 B)False

Question 12

If the price elasticity of supply is 2 and the quantity supplied decreases by 6%, then the price must have decreased by 3%.

Accepted Answer

A) True 
 B)False

Question 13

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 14

The demand for soap is more elastic than the demand for Dove soap.

Accepted Answer

A) True 
 B)False

Question 15

If the price of calculators increases by 15% and the quantity demanded per week falls by 45% as a result, then the price elasticity of demand is 3.

Accepted Answer

A) True 
 B)False

Question 16

If two goods are complements, their cross-price elasticity will be

Accepted Answer

A) positive. 
B) negative. 
C) zero. 
D) equal to the difference between the income elasticities of demand for the two goods. 
A) positive. 
B) negative. 
C) zero. 
D) equal to the difference between the income elasticities of demand for the two goods.

Question 17

Supply tends to be more elastic in the short run and more inelastic in the long run.

Accepted Answer

A) True 
 B)False

Question 18

Suppose the price elasticity of demand for a product is 1.3. If a supplier wants to increase revenue, what change should it make to price, if any?

Accepted Answer

The answer of Suppose the price elasticity of demand for...

Question 19

The price elasticity of supply measures how much

Accepted Answer

A) the quantity supplied responds to changes in input prices. 
B) the quantity supplied responds to changes in the price of the good. 
C) the price of the good responds to changes in supply. 
D) sellers respond to changes in technology. 
A) the quantity supplied responds to changes in input prices. 
B) the quantity supplied responds to changes in the price of the good. 
C) the price of the good responds to changes in supply. 
D) sellers respond to changes in technology.

Question 20

The demand for bread is likely to be more elastic than the demand for solid-gold bread plates.

Accepted Answer

A) True 
 B)False

Exam 5: Elasticity and Its Application

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

Suppose demand is given by the equation: QD = 50 - 5P Using the midpoint method, what is the price elasticity of demand between $7 and $8?

Normal goods have positive income elasticities of demand, while inferior goods have negative income elasticities of demand.

Suppose the price elasticity of demand for a product is 0.5. If a supplier wants to increase revenue, what change should it make to price, if any?

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

Suppose that good X has few close substitutes and that good Y has many close substitutes. Which good would you expect to have more price elastic demand?

If the price elasticity of supply is 0.7, and a price increase led to a 4.2 percent increase in quantity supplied, then the price increase is about

Table 5-6 Consider the following demand schedule. Price Quantity Demanded \ 0 1,000 \ 3 800 \ 6 600 \ 9 400 \ 12 200 \ 15 0 -Refer to Table 5-6. Using the midpoint method, what is the price elasticity of demand between $12 and $15?

The flatter the demand curve that passes through a given point, the more elastic the demand.

The price elasticity of demand is defined as the percentage change in price divided by the percentage change in quantity demanded.

If the price elasticity of supply is 2 and the quantity supplied decreases by 6%, then the price must have decreased by 3%.

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.

The demand for soap is more elastic than the demand for Dove soap.

If the price of calculators increases by 15% and the quantity demanded per week falls by 45% as a result, then the price elasticity of demand is 3.

If two goods are complements, their cross-price elasticity will be

Supply tends to be more elastic in the short run and more inelastic in the long run.

Suppose the price elasticity of demand for a product is 1.3. If a supplier wants to increase revenue, what change should it make to price, if any?

The price elasticity of supply measures how much

The demand for bread is likely to be more elastic than the demand for solid-gold bread plates.

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

Suppose demand is given by the equation: Q^D= 50 - 5P Using the midpoint method, what is the price elasticity of demand between $7 and $8?