Question 1

Figure 5-10  
-Refer to Figure 5-10. Total revenue when the price is P2 is represented by the area(s)

Accepted Answer

A)  B + D. 
B)  A + B. 
C)  C + D. 
D)  D. 
A)  B + D. 
B)  A + B. 
C)  C + D. 
D)  D.

Question 2

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 change in equilibrium quantity will be

Accepted Answer

A)  greater in the milk market than in the beef market. 
B)  greater in the beef market than in the milk market. 
C)  the same in the milk and beef markets. 
D)  Any of the above could be correct. 
A)  greater in the milk market than in the beef market. 
B)  greater in the beef market than in the milk market. 
C)  the same in the milk and beef markets. 
D)  Any of the above could be correct.

Question 3

Figure 5-5  
-Refer to Figure 5-5. Using the midpoint method, between prices of $50 and $60, price elasticity of demand is about

Accepted Answer

A)  0.22. 
B)  0.82. 
C)  1.22. 
D)  2. 
A)  0.22. 
B)  0.82. 
C)  1.22. 
D)  2.

Question 4

Cross-price elasticity of demand measures how

Accepted Answer

A)  the price of one good changes in response to a change in the price of another good. 
B)  the quantity demanded of one good changes in response to a change in the quantity demanded of another good. 
C)  the quantity demanded of one good changes in response to a change in the price of another good. 
D)  strongly normal or inferior a good is. 
A)  the price of one good changes in response to a change in the price of another good. 
B)  the quantity demanded of one good changes in response to a change in the quantity demanded of another good. 
C)  the quantity demanded of one good changes in response to a change in the price of another good. 
D)  strongly normal or inferior a good is.

Question 5

When the price of knee braces increased by 25 percent, the Brace Yourself Company increased its quantity supplied of knee braces per week by 75 percent. BYC's price elasticity of supply of knee braces is 0.33.

Accepted Answer

A) True 
 B)False

Question 6

On a certain supply curve, one point is (quantity supplied = 200, price = $4.00) and another point is (quantity supplied = 250, price = $4.50). Using the midpoint method, the price elasticity of supply is about

Accepted Answer

A)  0.22. 
B)  0.53. 
C)  1.00. 
D)  1.89. 
A)  0.22. 
B)  0.53. 
C)  1.00. 
D)  1.89.

Question 7

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

Accepted Answer

A)  peanut butter and jelly 
B)  automobile tires and coffee 
C)  pens and pencils 
D)  paperback novels and electronic books for e-readers 
A)  peanut butter and jelly 
B)  automobile tires and coffee 
C)  pens and pencils 
D)  paperback novels and electronic books for e-readers

Question 8

A government program that reduces land under cultivation hurts farmers but helps consumers.

Accepted Answer

A) True 
 B)False

Question 9

Demand for a good is said to be inelastic if the quantity demanded increases slightly when the price falls by a large amount.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

If the cross-price elasticity of demand for two goods is -4.5, then

Accepted Answer

A)  the two goods are substitutes. 
B)  the two goods are complements. 
C)  one of the goods is normal while the other good is inferior. 
D)  one of the goods is a luxury while the other good is a necessity. 
A)  the two goods are substitutes. 
B)  the two goods are complements. 
C)  one of the goods is normal while the other good is inferior. 
D)  one of the goods is a luxury while the other good is a necessity.

Question 12

Table 5-1
  
-Refer to Table 5-1. Which of the following is consistent with the elasticities given in Table 5-1?

Accepted Answer

A)  A is laundry detergent and B is Tide. 
B)  A is Diet Pepsi and B is sodb. 
C)  A is food and B is a yacht. 
D)  A is toilet paper and B is candles. 
A)  A is laundry detergent and B is Tide. 
B)  A is Diet Pepsi and B is sodb. 
C)  A is food and B is a yacht. 
D)  A is toilet paper and B is candles.

Question 13

If the price elasticity of demand for a good is 1, then a 3 percent decrease in price results in a

Accepted Answer

A)  0.1 percent increase in the quantity demanded. 
B)  1 percent increase in the quantity demanded. 
C)  3 percent increase in the quantity demanded. 
D)  4 percent increase in the quantity demanded. 
A)  0.1 percent increase in the quantity demanded. 
B)  1 percent increase in the quantity demanded. 
C)  3 percent increase in the quantity demanded. 
D)  4 percent increase in the quantity demanded.

Question 14

The price elasticity of demand changes as we move along a

Accepted Answer

A)  horizontal demand curve. 
B)  vertical demand curve. 
C)  linear, downward-sloping demand curve. 
D)  All of the above are correct. 
A)  horizontal demand curve. 
B)  vertical demand curve. 
C)  linear, downward-sloping demand curve. 
D)  All of the above are correct.

Question 15

For a particular good, an 8 percent increase in price causes a 4 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Accepted Answer

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

Question 16

For which of the following types of goods would the income elasticity of demand be positive and relatively large?

Accepted Answer

A)  all inferior goods 
B)  all normal goods 
C)  goods for which there are many complements 
D)  luxuries 
A)  all inferior goods 
B)  all normal goods 
C)  goods for which there are many complements 
D)  luxuries

Question 17

Table 5-4
The following table shows the demand schedule for a particular good.
  
-Refer to Table 5-4. Using the midpoint method, when price rises from $8 to $12, the price elasticity of demand is

Accepted Answer

A)  0.4 
B)  1 
C)  1.5 
D)  2.33 
A)  0.4 
B)  1 
C)  1.5 
D)  2.33

Question 18

Figure 5-15  
-Refer to Figure 5-15. Using the midpoint method, what is the price elasticity of supply between points C and D?

Accepted Answer

A)  0.21 
B)  0.29 
C)  0.73 
D)  1.36 
A)  0.21 
B)  0.29 
C)  0.73 
D)  1.36

Question 19

Some firms eventually experience problems with their capacity to produce output as their output levels increase. For these firms,

Accepted Answer

A)  market power is substantial. 
B)  supply is perfectly inelastic. 
C)  supply is more elastic at low levels of output and less elastic at high levels of output. 
D)  supply is less elastic at low levels of output and more elastic at high levels of output. 
A)  market power is substantial. 
B)  supply is perfectly inelastic. 
C)  supply is more elastic at low levels of output and less elastic at high levels of output. 
D)  supply is less elastic at low levels of output and more elastic at high levels of output.

Question 20

The difference between slope and elasticity is that slope

Accepted Answer

A)  is a ratio of two changes, and elasticity is a ratio of two percentage changes. 
B)  is a ratio of two percentage changes, and elasticity is a ratio of two changes. 
C)  measures changes in quantity demanded more accurately than elasticity. 
D)  None of the above is correct; there is no difference between slope and elasticity. 
A)  is a ratio of two changes, and elasticity is a ratio of two percentage changes. 
B)  is a ratio of two percentage changes, and elasticity is a ratio of two changes. 
C)  measures changes in quantity demanded more accurately than elasticity. 
D)  None of the above is correct; there is no difference between slope and elasticity.

Exam 5: Elasticity and Its Application

Figure 5-10 -Refer to Figure 5-10. Total revenue when the price is P2 is represented by the area(s)

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 change in equilibrium quantity will be

Figure 5-5 -Refer to Figure 5-5. Using the midpoint method, between prices of $50 and $60, price elasticity of demand is about

Cross-price elasticity of demand measures how

When the price of knee braces increased by 25 percent, the Brace Yourself Company increased its quantity supplied of knee braces per week by 75 percent. BYC's price elasticity of supply of knee braces is 0.33.

On a certain supply curve, one point is (quantity supplied = 200, price = $4.00) and another point is (quantity supplied = 250, price = $4.50). Using the midpoint method, the price elasticity of supply is about

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

A government program that reduces land under cultivation hurts farmers but helps consumers.

Demand for a good is said to be inelastic if the quantity demanded increases slightly when the price falls by a large amount.

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

If the cross-price elasticity of demand for two goods is -4.5, then

Table 5-1 -Refer to Table 5-1. Which of the following is consistent with the elasticities given in Table 5-1?

If the price elasticity of demand for a good is 1, then a 3 percent decrease in price results in a

The price elasticity of demand changes as we move along a

For a particular good, an 8 percent increase in price causes a 4 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

For which of the following types of goods would the income elasticity of demand be positive and relatively large?

Table 5-4 The following table shows the demand schedule for a particular good. -Refer to Table 5-4. Using the midpoint method, when price rises from $8 to $12, the price elasticity of demand is

Figure 5-15 -Refer to Figure 5-15. Using the midpoint method, what is the price elasticity of supply between points C and D?

Some firms eventually experience problems with their capacity to produce output as their output levels increase. For these firms,

The difference between slope and elasticity is that slope

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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