Question 1

Table 5-2
  
-Refer to Table 5-2. Using the midpoint method, if the price falls from $200 to $150, the price elasticity of demand is

Accepted Answer

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

Question 2

Scenario 5-8
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 5-8. Using the midpoint method, what is the income elasticity of demand for mobile service?

Accepted Answer

The answer of Scenario 5-8
Consider the markets for mobile and...

Question 3

Figure 5-4  
-Refer to Figure 5-4. If the price decreases in the region of the demand curve between points A and B, we can expect total revenue to

Accepted Answer

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

Question 4

The demand for grape-flavored Hubba Bubba bubble gum is likely

Accepted Answer

A)  inelastic because there are many close substitutes for grape-flavored Hubba Bubba . 
B)  elastic because there are many close substitutes for grape-flavored Hubba Bubbb. 
C)  inelastic because the market is broadly defined. 
D)  elastic because the market is broadly defined. 
A)  inelastic because there are many close substitutes for grape-flavored Hubba Bubba . 
B)  elastic because there are many close substitutes for grape-flavored Hubba Bubbb. 
C)  inelastic because the market is broadly defined. 
D)  elastic because the market is broadly defined.

Question 5

Figure 5-1  
-Refer to Figure 5-1. Between point A and point B, price elasticity of demand is equal to

Accepted Answer

A)  0.33. 
B)  0.67. 
C)  1.5 
D)  2.67. 
A)  0.33. 
B)  0.67. 
C)  1.5 
D)  2.67.

Question 6

Figure 5-3  
-Refer to Figure 5-3. Which demand curve is unit elastic?

Accepted Answer

A)  A 
B)  B 
C)  D 
D)  None of the above. 
A)  A 
B)  B 
C)  D 
D)  None of the above.

Question 7

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. 
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.

Question 8

Table 5-12
  
-Refer to Table 5-12. Using the midpoint method, what is the price elasticity of demand between $6 and $8?

Accepted Answer

The price

Question 9

Suppose demand is given by the equation:   Using the midpoint method, what is the price elasticity of demand between $7 and $8?

Accepted Answer

The price

Question 10

Economists compute the price elasticity of demand as the

Accepted Answer

A)  percentage change in price divided by the percentage change in quantity demanded. 
B)  change in quantity demanded divided by the change in the price. 
C)  percentage change in quantity demanded divided by the percentage change in price. 
D)  percentage change in quantity demanded divided by the percentage change in income. 
A)  percentage change in price divided by the percentage change in quantity demanded. 
B)  change in quantity demanded divided by the change in the price. 
C)  percentage change in quantity demanded divided by the percentage change in price. 
D)  percentage change in quantity demanded divided by the percentage change in income.

Question 11

Suppose that when the price rises by 20% for a particular good, the quantity demanded of that good falls by 10%.
The price elasticity of demand for this good is equal to 2.0.

Accepted Answer

A) True 
 B)False

Question 12

Skip's Sealcoating Service increased its total monthly revenue from $12,000 to $13,500 when it raised the price of driveway repairs from $600 to $750. The price elasticity of demand for Skip's Sealcoating Service is

Accepted Answer

A)  0.11. 
B)  0.47. 
C)  1.12. 
D)  2.11. 
A)  0.11. 
B)  0.47. 
C)  1.12. 
D)  2.11.

Question 13

Because the demand for wheat tends to be inelastic, the development of a new, more productive hybrid wheat would tend to

Accepted Answer

A)  increase the total revenue of wheat farmers. 
B)  decrease the total revenue of wheat farmers. 
C)  decrease the demand for wheat. 
D)  decrease the supply of wheat. 
A)  increase the total revenue of wheat farmers. 
B)  decrease the total revenue of wheat farmers. 
C)  decrease the demand for wheat. 
D)  decrease the supply of wheat.

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

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

Accepted Answer

A)  elastic section of the demand curve. 
B)  perfectly elastic section of the demand curve. 
C)  unit elastic section of the demand curve. 
D)  inelastic section of the demand curve. 
A)  elastic section of the demand curve. 
B)  perfectly elastic section of the demand curve. 
C)  unit elastic section of the demand curve. 
D)  inelastic section of the demand curve.

Question 16

Figure 5-21  
-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 17

Which of the following was not a reason OPEC failed to keep the price of oil high?

Accepted Answer

A)  Over the long run, producers of oil outside of OPEC responded to higher prices by increasing oil exploration and by building new extraction capacity. 
B)  Consumers responded to higher prices with greater conservation. 
C)  Consumers replaced old inefficient cars with newer efficient ones. 
D)  The agreement OPEC members signed allowed each country to produce as much oil as each wanted. 
A)  Over the long run, producers of oil outside of OPEC responded to higher prices by increasing oil exploration and by building new extraction capacity. 
B)  Consumers responded to higher prices with greater conservation. 
C)  Consumers replaced old inefficient cars with newer efficient ones. 
D)  The agreement OPEC members signed allowed each country to produce as much oil as each wanted.

Question 18

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

Accepted Answer

A)  water 
B)  sapphire pendant necklaces 
C)  filet mignon steaks 
D)  fresh fruit 
A)  water 
B)  sapphire pendant necklaces 
C)  filet mignon steaks 
D)  fresh fruit

Question 19

Necessities such as food and clothing tend to have

Accepted Answer

A)  high price elasticities of demand and high income elasticities of demand. 
B)  high price elasticities of demand and low income elasticities of demand. 
C)  low price elasticities of demand and high income elasticities of demand. 
D)  low price elasticities of demand and low income elasticities of demand. 
A)  high price elasticities of demand and high income elasticities of demand. 
B)  high price elasticities of demand and low income elasticities of demand. 
C)  low price elasticities of demand and high income elasticities of demand. 
D)  low price elasticities of demand and low income elasticities of demand.

Question 20

Price elasticity of supply measures how much the quantity supplied responds to changes in the price.

Accepted Answer

A) True 
 B)False

Exam 5: Elasticity and Its Application

Table 5-2 -Refer to Table 5-2. Using the midpoint method, if the price falls from $200 to $150, the price elasticity of demand is

Figure 5-4 -Refer to Figure 5-4. If the price decreases in the region of the demand curve between points A and B, we can expect total revenue to

The demand for grape-flavored Hubba Bubba bubble gum is likely

Figure 5-1 -Refer to Figure 5-1. Between point A and point B, price elasticity of demand is equal to

Figure 5-3 -Refer to Figure 5-3. Which demand curve is unit elastic?

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

Table 5-12 -Refer to Table 5-12. Using the midpoint method, what is the price elasticity of demand between $6 and $8?

Suppose demand is given by the equation: Using the midpoint method, what is the price elasticity of demand between $7 and $8?

Economists compute the price elasticity of demand as the

Suppose that when the price rises by 20% for a particular good, the quantity demanded of that good falls by 10%. The price elasticity of demand for this good is equal to 2.0.

Skip's Sealcoating Service increased its total monthly revenue from $12,000 to $13,500 when it raised the price of driveway repairs from $600 to $750. The price elasticity of demand for Skip's Sealcoating Service is

Because the demand for wheat tends to be inelastic, the development of a new, more productive hybrid wheat would tend to

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?

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

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

Which of the following was not a reason OPEC failed to keep the price of oil high?

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

Necessities such as food and clothing tend to have

Price elasticity of supply measures how much the quantity supplied responds to changes in the price.

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

Application: 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 of Microeconomics

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