Question 1

Figure 5-12  
-Refer to Figure 5-12. Sellers' total revenue would increase if the price

Accepted Answer

A)  increased from $12 to $15. 
B)  decreased from $39 to $36. 
C)  decreased from $27 to $24. 
D)  All of the above are correct. 
A)  increased from $12 to $15. 
B)  decreased from $39 to $36. 
C)  decreased from $27 to $24. 
D)  All of the above are correct.

Question 2

Figure 5-21  
-If a supply curve is perfectly horizontal, what is the value of the price elasticity of supply?

Accepted Answer

The answer of Figure 5-21  
-If a supply curve...

Question 3

If a 20% change in price results in a 15% change in quantity supplied, then the price elasticity of supply is about

Accepted Answer

A)  1.33, and supply is elastic. 
B)  1.33, and supply is inelastic. 
C)  0.75, and supply is elastic. 
D)  0.75, and supply is inelastid. 
A)  1.33, and supply is elastic. 
B)  1.33, and supply is inelastic. 
C)  0.75, and supply is elastic. 
D)  0.75, and supply is inelastid.

Question 4

Figure 5-16  
-Refer to Figure 5-16. Using the midpoint method, what is the price elasticity of supply between $4 and $6?

Accepted Answer

A)  0.75 
B)  1.00 
C)  1.20 
D)  1.25 
A)  0.75 
B)  1.00 
C)  1.20 
D)  1.25

Question 5

When consumers face rising gasoline prices, they typically

Accepted Answer

A)  reduce their quantity demanded more in the long run than in the short run. 
B)  reduce their quantity demanded more in the short run than in the long run. 
C)  do not reduce their quantity demanded in the short run or the long run. 
D)  increase their quantity demanded in the short run but reduce their quantity demanded in the long run. 
A)  reduce their quantity demanded more in the long run than in the short run. 
B)  reduce their quantity demanded more in the short run than in the long run. 
C)  do not reduce their quantity demanded in the short run or the long run. 
D)  increase their quantity demanded in the short run but reduce their quantity demanded in the long run.

Question 6

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

Accepted Answer

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

Question 7

Scenario 5-5
Milk has an inelastic demand, and beef 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 5-5. The equilibrium quantity will

Accepted Answer

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

Question 8

If a 40% change in price results in a 25% change in quantity supplied, then the price elasticity of supply is about

Accepted Answer

A)  0.63, and supply is elastic. 
B)  0.63, and supply is inelastic. 
C)  1.60, and supply is elastic. 
D)  1.60, and supply is inelastid. 
A)  0.63, and supply is elastic. 
B)  0.63, and supply is inelastic. 
C)  1.60, and supply is elastic. 
D)  1.60, and supply is inelastid.

Question 9

If the price elasticity of demand for a good is 0.8, then a 12 percent increase in the quantity demanded must be the result of

Accepted Answer

A)  a 0.06 percent decrease in the price. 
B)  a 1.5 percent decrease in the price. 
C)  a 9.6 percent decrease in the price. 
D)  a 15 percent decrease in the price. 
A)  a 0.06 percent decrease in the price. 
B)  a 1.5 percent decrease in the price. 
C)  a 9.6 percent decrease in the price. 
D)  a 15 percent decrease in the price.

Question 10

Cross-price elasticity is used to determine whether goods are inferior or normal goods.

Accepted Answer

A) True 
 B)False

Question 11

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 inelastid. 
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 inelastid.

Question 12

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 13

How does total revenue change as one moves downward and to the right along a linear demand curve?

Accepted Answer

A)  It always increases. 
B)  It always decreases. 
C)  It first increases, then decreases. 
D)  It is unaffected by a movement along the demand curve. 
A)  It always increases. 
B)  It always decreases. 
C)  It first increases, then decreases. 
D)  It is unaffected by a movement along the demand curve.

Question 14

Good news for farming can be bad news for farmers because the

Accepted Answer

A)  supply curve for an individual farmer is usually perfectly elastic. 
B)  supply curve for an individual farmer is usually perfectly inelastic. 
C)  demand for basic foodstuffs is usually inelastic, meaning that factors that shift supply to the right decrease total revenues to sellers. 
D)  demand for basic foodstuffs is usually elastic, meaning that factors that shift supply to the right increase total revenues to sellers. 
A)  supply curve for an individual farmer is usually perfectly elastic. 
B)  supply curve for an individual farmer is usually perfectly inelastic. 
C)  demand for basic foodstuffs is usually inelastic, meaning that factors that shift supply to the right decrease total revenues to sellers. 
D)  demand for basic foodstuffs is usually elastic, meaning that factors that shift supply to the right increase total revenues to sellers.

Question 15

Table 5-7
The following table shows a portion of the demand schedule for a particular good at various levels of income.
  
-Refer to Table 5-7. Using the midpoint method, when income equals $5,000, what is the price elasticity of demand between $8 and $12?

Accepted Answer

A)  0.56 
B)  0.75 
C)  1.33 
D)  1.80 
A)  0.56 
B)  0.75 
C)  1.33 
D)  1.80

Question 16

OPEC successfully raised the world price of oil in the 1970s and early 1980s, primarily due to

Accepted Answer

A)  an inelastic demand for oil and a reduction in the amount of oil supplied. 
B)  a reduction in the amount of oil supplied and a world-wide oil embargo. 
C)  a world-wide oil embargo and an elastic demand for oil. 
D)  a reduction in the amount of oil supplied and an elastic demand for oil. 
A)  an inelastic demand for oil and a reduction in the amount of oil supplied. 
B)  a reduction in the amount of oil supplied and a world-wide oil embargo. 
C)  a world-wide oil embargo and an elastic demand for oil. 
D)  a reduction in the amount of oil supplied and an elastic demand for oil.

Question 17

Suppose that when the price of good X falls from $10 to $8, the quantity demanded of good Y rises from 20 units to 25 units. Using the midpoint method, the cross-price elasticity of demand is

Accepted Answer

A)  -1.0, and X and Y are complements. 
B)  -1.0, and X and Y are substitutes. 
C)  1.0, and X and Y are complements. 
D)  1.0, and X and Y are substitutes. 
A)  -1.0, and X and Y are complements. 
B)  -1.0, and X and Y are substitutes. 
C)  1.0, and X and Y are complements. 
D)  1.0, and X and Y are substitutes.

Question 18

At price of $1.20, a local pencil manufacturer is willing to supply 150 boxes per day. At a price of $1.40, the manufacturer is willing to supply 170 boxes per day. Using the midpoint method, the price elasticity of supply is about

Accepted Answer

A)  2.0. 
B)  1.23. 
C)  1.00. 
D)  0.81. 
A)  2.0. 
B)  1.23. 
C)  1.00. 
D)  0.81.

Question 19

Danita rescues dogs from her local animal shelter. When Danita's income rises by 7 percent, her quantity demanded of dog biscuits increases by 12 percent. For Danita, the income elasticity of demand for dog biscuits is

Accepted Answer

A)  negative, and dog biscuits are a normal good. 
B)  negative, and dog biscuits are an inferior good. 
C)  positive, and dog biscuits are an inferior good. 
D)  positive, and dog biscuits are a normal good. 
A)  negative, and dog biscuits are a normal good. 
B)  negative, and dog biscuits are an inferior good. 
C)  positive, and dog biscuits are an inferior good. 
D)  positive, and dog biscuits are a normal good.

Question 20

Price elasticity of demand along a linear, downward-sloping demand curve decreases as price falls.

Accepted Answer

A) True 
 B)False

Exam 5: Elasticity and Its Application

Figure 5-12 -Refer to Figure 5-12. Sellers' total revenue would increase if the price

Figure 5-21 -If a supply curve is perfectly horizontal, what is the value of the price elasticity of supply?

If a 20% change in price results in a 15% change in quantity supplied, then the price elasticity of supply is about

Figure 5-16 -Refer to Figure 5-16. Using the midpoint method, what is the price elasticity of supply between $4 and $6?

When consumers face rising gasoline prices, they typically

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

Scenario 5-5 Milk has an inelastic demand, and beef 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 5-5. The equilibrium quantity will

If a 40% change in price results in a 25% change in quantity supplied, then the price elasticity of supply is about

If the price elasticity of demand for a good is 0.8, then a 12 percent increase in the quantity demanded must be the result of

Cross-price elasticity is used to determine whether goods are inferior or normal goods.

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

The price elasticity of supply measures how responsive

How does total revenue change as one moves downward and to the right along a linear demand curve?

Good news for farming can be bad news for farmers because the

Table 5-7 The following table shows a portion of the demand schedule for a particular good at various levels of income. -Refer to Table 5-7. Using the midpoint method, when income equals $5,000, what is the price elasticity of demand between $8 and $12?

OPEC successfully raised the world price of oil in the 1970s and early 1980s, primarily due to

Suppose that when the price of good X falls from $10 to $8, the quantity demanded of good Y rises from 20 units to 25 units. Using the midpoint method, the cross-price elasticity of demand is

At price of $1.20, a local pencil manufacturer is willing to supply 150 boxes per day. At a price of $1.40, the manufacturer is willing to supply 170 boxes per day. Using the midpoint method, the price elasticity of supply is about

Danita rescues dogs from her local animal shelter. When Danita's income rises by 7 percent, her quantity demanded of dog biscuits increases by 12 percent. For Danita, the income elasticity of demand for dog biscuits is

Price elasticity of demand along a linear, downward-sloping demand curve decreases as price falls.

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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