Question 1

If the price elasticity of demand is equal to 1, then demand is unit elastic.

Accepted Answer

A) True 
 B)False

Question 2

Suppose a freeze in Florida significantly reduces the supply of oranges this year. As a result, would you expect the total revenue from the sale of orange juice to rise or fall? Explain.

Accepted Answer

Since oranges are an input into the prod

Question 3

There are very few, if any, good substitutes for motor oil. Therefore, the

Accepted Answer

A)  demand for motor oil would tend to be inelastic. 
B)  demand for motor oil would tend to be elastic. 
C)  demand for motor oil would tend to respond strongly to changes in prices of other goods. 
D)  supply of motor oil would tend to respond strongly to changes in people's tastes for large cars relative to their tastes for small cars. 
A)  demand for motor oil would tend to be inelastic. 
B)  demand for motor oil would tend to be elastic. 
C)  demand for motor oil would tend to respond strongly to changes in prices of other goods. 
D)  supply of motor oil would tend to respond strongly to changes in people's tastes for large cars relative to their tastes for small cars.

Question 4

If the demand for bananas is elastic, then an increase in the price of bananas will

Accepted Answer

A)  increase total revenue of banana sellers. 
B)  decrease total revenue of banana sellers. 
C)  not change total revenue of banana sellers. 
D)  There is not enough information to answer this question. 
A)  increase total revenue of banana sellers. 
B)  decrease total revenue of banana sellers. 
C)  not change total revenue of banana sellers. 
D)  There is not enough information to answer this question.

Question 5

If a 15% increase in price for a good results in a 20% decrease in quantity demanded, the price elasticity of demand is

Accepted Answer

A)  0.75. 
B)  1.25. 
C)  1.33. 
D)  1.60. 
A)  0.75. 
B)  1.25. 
C)  1.33. 
D)  1.60.

Question 6

If the cross-price elasticity of two goods is negative, then the two goods are

Accepted Answer

A)  necessities. 
B)  complements. 
C)  normal goods. 
D)  inferior goods. 
A)  necessities. 
B)  complements. 
C)  normal goods. 
D)  inferior goods.

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Elasticity measures how responsive quantity is to changes in price.

Accepted Answer

A) True 
 B)False

Question 9

When demand is unit elastic, price elasticity of demand equals

Accepted Answer

A)  1, and total revenue and price move in the same direction. 
B)  1, and total revenue and price move in opposite directions. 
C)  1, and total revenue does not change when price changes. 
D)  0, and total revenue does not change when price changes. 
A)  1, and total revenue and price move in the same direction. 
B)  1, and total revenue and price move in opposite directions. 
C)  1, and total revenue does not change when price changes. 
D)  0, and total revenue does not change when price changes.

Question 10

A discovery that increases wheat yields per acre hurts farmers by increasing supply and lowering their total revenues.

Accepted Answer

A) True 
 B)False

Question 11

Jerome says that he will spend exactly $25 each month on new apps for his mobile device, regardless of the price of apps. Jerome's demand for apps is

Accepted Answer

A)  perfectly elastic. 
B)  unit elastic. 
C)  perfectly inelastic. 
D)  somewhat inelastic, but not perfectly inelastid. 
A)  perfectly elastic. 
B)  unit elastic. 
C)  perfectly inelastic. 
D)  somewhat inelastic, but not perfectly inelastid.

Question 12

A recent news report lamented the plight of corn farmers in Wisconsin due to a severe drought. Which of the following best describes the effect on corn farmers in Minnesota, where sufficient rainfall occurred?

Accepted Answer

A)  Their revenue increases because price increases and demand is elastic. 
B)  Their revenue increases because price increases and demand is inelastic. 
C)  Their revenue decreases because price decreases and demand is inelastic. 
D)  Their revenue decreases because price increases and demand is elastid. 
A)  Their revenue increases because price increases and demand is elastic. 
B)  Their revenue increases because price increases and demand is inelastic. 
C)  Their revenue decreases because price decreases and demand is inelastic. 
D)  Their revenue decreases because price increases and demand is elastid.

Question 13

If the quantity demanded of a certain good responds only slightly to a change in the price of the good, then the

Accepted Answer

A)  demand for the good is said to be elastic. 
B)  demand for the good is said to be inelastic. 
C)  law of demand does not apply to the good. 
D)  demand curve for the good shifts only slightly in response to a change in price. 
A)  demand for the good is said to be elastic. 
B)  demand for the good is said to be inelastic. 
C)  law of demand does not apply to the good. 
D)  demand curve for the good shifts only slightly in response to a change in price.

Question 14

Table 5-12
  
-Refer to Table 5-12. Between which two quantities listed is demand most inelastic?

Accepted Answer

The answer of Table 5-12
  
-Refer to Table 5-12....

Question 15

Figure 5-4  
-Refer to Figure 5-4. Suppose the point labeled B is the "halfway point" on the demand curve and it corresponds to a price of $5.00. Then, between prices of $4.99 and $5.01, the price elasticity of demand is

Accepted Answer

A)  less than 1 but greater than zero. 
B)  equal to 1. 
C)  greater than 1. 
D)  equal to zero. 
A)  less than 1 but greater than zero. 
B)  equal to 1. 
C)  greater than 1. 
D)  equal to zero.

If the price elasticity of demand is equal to 1, then demand is unit elastic.

Suppose a freeze in Florida significantly reduces the supply of oranges this year. As a result, would you expect the total revenue from the sale of orange juice to rise or fall? Explain.

There are very few, if any, good substitutes for motor oil. Therefore, the

If the demand for bananas is elastic, then an increase in the price of bananas will

If a 15% increase in price for a good results in a 20% decrease in quantity demanded, the price elasticity of demand is

If the cross-price elasticity of two goods is negative, then the two goods are

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

Elasticity measures how responsive quantity is to changes in price.

When demand is unit elastic, price elasticity of demand equals

A discovery that increases wheat yields per acre hurts farmers by increasing supply and lowering their total revenues.

Jerome says that he will spend exactly $25 each month on new apps for his mobile device, regardless of the price of apps. Jerome's demand for apps is

A recent news report lamented the plight of corn farmers in Wisconsin due to a severe drought. Which of the following best describes the effect on corn farmers in Minnesota, where sufficient rainfall occurred?

If the quantity demanded of a certain good responds only slightly to a change in the price of the good, then the

Table 5-12 -Refer to Table 5-12. Between which two quantities listed is demand most inelastic?

Figure 5-4 -Refer to Figure 5-4. Suppose the point labeled B is the "halfway point" on the demand curve and it corresponds to a price of $5.00. Then, between prices of $4.99 and $5.01, the price elasticity of demand is

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

Filters

Exam 5: Elasticity and Its Application

If the price elasticity of demand is equal to 1, then demand is unit elastic.

Suppose a freeze in Florida significantly reduces the supply of oranges this year. As a result, would you expect the total revenue from the sale of orange juice to rise or fall? Explain.

There are very few, if any, good substitutes for motor oil. Therefore, the

If the demand for bananas is elastic, then an increase in the price of bananas will

If a 15% increase in price for a good results in a 20% decrease in quantity demanded, the price elasticity of demand is

If the cross-price elasticity of two goods is negative, then the two goods are

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

Elasticity measures how responsive quantity is to changes in price.

When demand is unit elastic, price elasticity of demand equals

A discovery that increases wheat yields per acre hurts farmers by increasing supply and lowering their total revenues.

Jerome says that he will spend exactly $25 each month on new apps for his mobile device, regardless of the price of apps. Jerome's demand for apps is

A recent news report lamented the plight of corn farmers in Wisconsin due to a severe drought. Which of the following best describes the effect on corn farmers in Minnesota, where sufficient rainfall occurred?

If the quantity demanded of a certain good responds only slightly to a change in the price of the good, then the

Table 5-12 -Refer to Table 5-12. Between which two quantities listed is demand most inelastic?

Figure 5-4 -Refer to Figure 5-4. Suppose the point labeled B is the "halfway point" on the demand curve and it corresponds to a price of $5.00. Then, between prices of $4.99 and $5.01, the price elasticity of demand is

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

Filters