Question 1

Figure 5-4
  
-Refer to Figure 5-4. Total revenue when the price is P1 is represented by

Accepted Answer

A) areas B + D. 
B) areas A + B. 
C) areas C + D. 
D) area D. 
A) areas B + D. 
B) areas A + B. 
C) areas C + D. 
D) area D.

Question 2

Figure 5-2
   ​
-Refer to Figure 5-2. If the price decreases in the region of the demand curve between points B to A, we can expect total revenue to

Accepted Answer

A) decrease. 
B) stay the same. 
C) increase. 
D) first decrease, then increase until total revenue is maximized. 
A) decrease. 
B) stay the same. 
C) increase. 
D) first decrease, then increase until total revenue is maximized.

Question 3

If marijuana were legalized, it is likely that there would be an increase in the demand for marijuana. If demand for marijuana is inelastic and the supply of marijuana is perfectly elastic, this will result in

Accepted Answer

A) higher prices and higher total revenue from marijuana sales. 
B) higher prices but lower total revenue from marijuana sales. 
C) the same price and higher total revenue from marijuana sales. 
D) the same price but lower total revenue from marijuana sales. 
A) higher prices and higher total revenue from marijuana sales. 
B) higher prices but lower total revenue from marijuana sales. 
C) the same price and higher total revenue from marijuana sales. 
D) the same price but lower total revenue from marijuana sales.

Question 4

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 5

The supply of a good will be more elastic, the

Accepted Answer

A) more the good is considered a luxury. 
B) broader is the definition of the market for the good. 
C) larger the number of close substitutes for the good. 
D) longer the time period being considered. 
A) more the good is considered a luxury. 
B) broader is the definition of the market for the good. 
C) larger the number of close substitutes for the good. 
D) longer the time period being considered.

Question 6

Figure 5-3
   ​
-Refer to Figure 5-3. At a price of $60 per unit, sellers' total revenue equals

Accepted Answer

A) $1,000. 
B) $1,200. 
C) $1,400. 
D) $1,160. 
A) $1,000. 
B) $1,200. 
C) $1,400. 
D) $1,160.

Question 7

Figure 5-8
   ​
-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 8

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

Accepted Answer

A) True 
 B)False

Question 9

Last year, Damaris bought 8 burgers when her income was $43,000. This year, her income is $54,000, and she purchased 9 burgers. Holding other factors constant and using the midpoint method, it follows that Damaris's income elasticity of demand is about

Accepted Answer

A) 1.93, and Damaris regards burgers as inferior goods. 
B) 1.93, and Damaris regards burgers as normal goods. 
C) 0.52, and Damaris regards burgers as inferior goods. 
D) 0.52, and Damaris regards burgers as normal goods. 
A) 1.93, and Damaris regards burgers as inferior goods. 
B) 1.93, and Damaris regards burgers as normal goods. 
C) 0.52, and Damaris regards burgers as inferior goods. 
D) 0.52, and Damaris regards burgers as normal goods.

Question 10

Studies indicate that the price elasticity of demand for cigarettes is about 0.4. A government policy aimed at reducing smoking changed the price of a pack of cigarettes from $2 to $6. According to the midpoint method, the government policy should have reduced smoking by

Accepted Answer

A) 30 percent. 
B) 40 percent. 
C) 80 percent. 
D) 250 percent. 
A) 30 percent. 
B) 40 percent. 
C) 80 percent. 
D) 250 percent.

Question 11

Scenario 5-2
Milk has an inelastic demand, and steak 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 5-2. The equilibrium price will

Accepted Answer

A) decrease in both the milk and steak markets. 
B) increase in the milk market and decrease in the steak market. 
C) decrease in the milk market and increase in the steak market. 
D) increase in both the milk and steak markets. 
A) decrease in both the milk and steak markets. 
B) increase in the milk market and decrease in the steak market. 
C) decrease in the milk market and increase in the steak market. 
D) increase in both the milk and steak markets.

Question 12

For a particular good, a 12 percent increase in price causes a 3 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Accepted Answer

A) There are many substitutes for this good. 
B) The good is a necessity. 
C) The market for the good is narrowly defined. 
D) The relevant time horizon is long. 
A) There are many substitutes for this good. 
B) The good is a necessity. 
C) The market for the good is narrowly defined. 
D) The relevant time horizon is long.

Question 13

Figure 5-4
  
-Refer to Figure 5-4. If rectangle D is larger than rectangle A, then which of the following is not correct?

Accepted Answer

A) Demand is elastic between prices P1 and P2. 
B) A decrease in price from P2 to P1 will cause an increase in total revenue. 
C) The magnitude of the percentage change in price between P1 and P2 is smaller than the magnitude of the corresponding percent change in quantity demanded. 
D) An increase in price from P1 to P2 will cause an increase in total revenue. 
A) Demand is elastic between prices P1 and P2. 
B) A decrease in price from P2 to P1 will cause an increase in total revenue. 
C) The magnitude of the percentage change in price between P1 and P2 is smaller than the magnitude of the corresponding percent change in quantity demanded. 
D) An increase in price from P1 to P2 will cause an increase in total revenue.

Question 14

Suppose the price of gas increases by 20%. Will demand be more elastic if consumers have 3 weeks or 3 years to adjust to this price change?

Accepted Answer

The answer of Suppose the price of gas increases by...

Question 15

When the price of good A is $50, the quantity demanded of good A is 500 units. When the price of good A rises to $70, the quantity demanded of good A falls to 400 units. Using the midpoint method, the price elasticity of demand for good A is

Accepted Answer

A) 1.50, and an increase in price will result in an increase in total revenue for good A. 
B) 1.50, and an increase in price will result in a decrease in total revenue for good A. 
C) 0.67, and an increase in price will result in an increase in total revenue for good A. 
D) 0.67, and an increase in price will result in a decrease in total revenue for good A. 
A) 1.50, and an increase in price will result in an increase in total revenue for good A. 
B) 1.50, and an increase in price will result in a decrease in total revenue for good A. 
C) 0.67, and an increase in price will result in an increase in total revenue for good A. 
D) 0.67, and an increase in price will result in a decrease in total revenue for good A.

Question 16

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

Accepted Answer

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

Question 17

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

Accepted Answer

A) White chocolate chip with macadamia nut cookies 
B) Cookies 
C) Mrs.Field's chocolate chip cookies 
D) Milk chocolate chip cookies 
A) White chocolate chip with macadamia nut cookies 
B) Cookies 
C) Mrs.Field's chocolate chip cookies 
D) Milk chocolate chip cookies

Question 18

Scenario 5-2
Milk has an inelastic demand, and steak 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 5-2. Total consumer spending on milk will

Accepted Answer

A) increase, and total consumer spending on steak will increase. 
B) decrease, and total consumer spending on steak will decrease. 
C) decrease, and total consumer spending on steak will increase. 
D) increase, and total consumer spending on steak will decrease. 
A) increase, and total consumer spending on steak will increase. 
B) decrease, and total consumer spending on steak will decrease. 
C) decrease, and total consumer spending on steak will increase. 
D) increase, and total consumer spending on steak will decrease.

Question 19

Which of the following could be the price elasticity of demand for a good for which a decrease in price would increase total revenue?

Accepted Answer

A) 0.9 
B) 0.0 
C) 1 
D) 2.5 
A) 0.9 
B) 0.0 
C) 1 
D) 2.5

Question 20

Demand is elastic if the price elasticity of demand is greater than 1.

Accepted Answer

A) True 
 B)False

Exam 5: Elasticity and Its Application

Figure 5-4 -Refer to Figure 5-4. Total revenue when the price is P1 is represented by

Figure 5-2 ​ -Refer to Figure 5-2. If the price decreases in the region of the demand curve between points B to A, we can expect total revenue to

If marijuana were legalized, it is likely that there would be an increase in the demand for marijuana. If demand for marijuana is inelastic and the supply of marijuana is perfectly elastic, this will result in

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.

The supply of a good will be more elastic, the

Figure 5-3 ​ -Refer to Figure 5-3. At a price of $60 per unit, sellers' total revenue equals

Figure 5-8 ​ -Refer to Figure 5-21. Using the midpoint method, what is the price elasticity of supply between $15 and $25?

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

Last year, Damaris bought 8 burgers when her income was $43,000. This year, her income is $54,000, and she purchased 9 burgers. Holding other factors constant and using the midpoint method, it follows that Damaris's income elasticity of demand is about

Studies indicate that the price elasticity of demand for cigarettes is about 0.4. A government policy aimed at reducing smoking changed the price of a pack of cigarettes from $2 to $6. According to the midpoint method, the government policy should have reduced smoking by

Scenario 5-2 Milk has an inelastic demand, and steak 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 5-2. The equilibrium price will

For a particular good, a 12 percent increase in price causes a 3 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Figure 5-4 -Refer to Figure 5-4. If rectangle D is larger than rectangle A, then which of the following is not correct?

Suppose the price of gas increases by 20%. Will demand be more elastic if consumers have 3 weeks or 3 years to adjust to this price change?

When the price of good A is $50, the quantity demanded of good A is 500 units. When the price of good A rises to $70, the quantity demanded of good A falls to 400 units. Using the midpoint method, the price elasticity of demand for good A is

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

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

Scenario 5-2 Milk has an inelastic demand, and steak 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 5-2. Total consumer spending on milk will

Which of the following could be the price elasticity of demand for a good for which a decrease in price would increase total revenue?

Demand is elastic if the price elasticity of demand is greater than 1.

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

Figure 5-4 -Refer to Figure 5-4. Total revenue when the price is P₁ is represented by

Figure 5-2 -Refer to Figure 5-2. If the price decreases in the region of the demand curve between points B to A, we can expect total revenue to

Figure 5-3 -Refer to Figure 5-3. At a price of $60 per unit, sellers' total revenue equals

Figure 5-8 -Refer to Figure 5-21. Using the midpoint method, what is the price elasticity of supply between $15 and $25?