Question 1

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 2

If a 6% decrease in price for a good results in a 2% increase in quantity demanded, the price elasticity of demand is

Accepted Answer

A)  0.02. 
B)  0.33. 
C) 3 
D)  4. 
A)  0.02. 
B)  0.33. 
C) 3 
D)  4.

Question 3

Figure 5-4  
-Refer to Figure 5-4. Assume the section of the demand curve from B to C corresponds to prices between $0 and $15. Then, when the price changes between $7 and $9,

Accepted Answer

A)  quantity demanded changes proportionately less than the price. 
B)  quantity demanded changes proportionately more than the price. 
C)  quantity demanded changes the same amount proportionately as price. 
D)  the price elasticity of demand equals zero. 
A)  quantity demanded changes proportionately less than the price. 
B)  quantity demanded changes proportionately more than the price. 
C)  quantity demanded changes the same amount proportionately as price. 
D)  the price elasticity of demand equals zero.

Question 4

If the price elasticity of demand for a good is 0.4, then which of the following events is consistent with a 2 percent decrease in the quantity of the good demanded?

Accepted Answer

A)  a 0.8 percent increase in the price of the good 
B)  a 2.4 percent increase in the price of the good 
C)  a 5 percent increase in the price of the good 
D)  a 8 percent increase in the price of the good 
A)  a 0.8 percent increase in the price of the good 
B)  a 2.4 percent increase in the price of the good 
C)  a 5 percent increase in the price of the good 
D)  a 8 percent increase in the price of the good

Question 5

The price elasticity of demand measures how much

Accepted Answer

A)  quantity demanded responds to a change in price. 
B)  quantity demanded responds to a change in income. 
C)  price responds to a change in demand. 
D)  demand responds to a change in supply. 
A)  quantity demanded responds to a change in price. 
B)  quantity demanded responds to a change in income. 
C)  price responds to a change in demand. 
D)  demand responds to a change in supply.

Question 6

The midpoint method is used to compute elasticity because it

Accepted Answer

A)  automatically computes a positive number instead of a negative number. 
B)  results in an elasticity that is the same as the slope of the demand curve. 
C)  gives the same answer regardless of the direction of change. 
D)  automatically rounds quantities to the nearest whole unit. 
A)  automatically computes a positive number instead of a negative number. 
B)  results in an elasticity that is the same as the slope of the demand curve. 
C)  gives the same answer regardless of the direction of change. 
D)  automatically rounds quantities to the nearest whole unit.

Question 7

Assume that a 4 percent increase in income results in a 2 percent increase in the quantity demanded of a good. The income elasticity of demand for the good is

Accepted Answer

A)  negative, and the good is an inferior good. 
B)  negative, and the good is a normal good. 
C)  positive, and the good is a normal good. 
D)  positive, and the good is an inferior good. 
A)  negative, and the good is an inferior good. 
B)  negative, and the good is a normal good. 
C)  positive, and the good is a normal good. 
D)  positive, and the good is an inferior good.

Question 8

Suppose that an increase in the price of melons from $1.30 to $1.80 per pound increases the quantity of melons that melon farmers produce from 1.2 million pounds to 1.6 million pounds. Using the midpoint method, what is the approximate value of the price elasticity of supply?

Accepted Answer

A)  0.67 
B)  0.89 
C)  1.00 
D)  1.13 
A)  0.67 
B)  0.89 
C)  1.00 
D)  1.13

Question 9

Suppose that corn farmers want to increase their total revenue. Knowing that the demand for corn is inelastic, corn farmers should

Accepted Answer

A)  plant more corn so that they would be able to sell more each year. 
B)  increase spending on fertilizer in an attempt to produce more corn on the acres they farm. 
C)  reduce the number of acres on which they plant corn. 
D)  contribute to a fund that promotes technological advances in corn production. 
A)  plant more corn so that they would be able to sell more each year. 
B)  increase spending on fertilizer in an attempt to produce more corn on the acres they farm. 
C)  reduce the number of acres on which they plant corn. 
D)  contribute to a fund that promotes technological advances in corn production.

Question 10

Table 5-5
  
-Refer to Table 5-5. When price is between $5 and $9, demand is

Accepted Answer

A)  elastic. 
B)  unit elastic. 
C)  inelastic. 
D)  There is not enough information given to determine whether demand is elastic, unit elastic, or inelastid. 
A)  elastic. 
B)  unit elastic. 
C)  inelastic. 
D)  There is not enough information given to determine whether demand is elastic, unit elastic, or inelastid.

Question 11

Using the midpoint method, compute the elasticity of demand between points A and B. Is demand along this portion of the curve elastic or inelastic? Interpret your answer with regard to price and quantity demanded. Now compute the elasticity of demand between points B and C. Is demand along this portion of the curve elastic or inelastic?

Accepted Answer

In the section of the demand curve from

Question 12

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 price 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 13

The midpoint method for calculating elasticities is convenient in that it allows us to

Accepted Answer

A)  ignore the percentage change in quantity demanded and instead focus entirely on the percentage change in price. 
B)  calculate the same value for the elasticity, regardless of whether the price increases or decreases. 
C)  assume that sellers' total revenue stays constant when the price changes. 
D)  restrict all elasticity values to between 0 and 1. 
A)  ignore the percentage change in quantity demanded and instead focus entirely on the percentage change in price. 
B)  calculate the same value for the elasticity, regardless of whether the price increases or decreases. 
C)  assume that sellers' total revenue stays constant when the price changes. 
D)  restrict all elasticity values to between 0 and 1.

Question 14

Between 1950 and today there was a

Accepted Answer

A)  20 percent drop in the number of farmers, but farm output more than tripled. 
B)  30 percent drop in the number of farmers, but farm output more than tripled. 
C)  50 percent drop in the number of farmers, but farm output more than doubled. 
D)  70 percent drop in the number of farmers, but farm output more than doubled. 
A)  20 percent drop in the number of farmers, but farm output more than tripled. 
B)  30 percent drop in the number of farmers, but farm output more than tripled. 
C)  50 percent drop in the number of farmers, but farm output more than doubled. 
D)  70 percent drop in the number of farmers, but farm output more than doubled.

Question 15

Figure 5-9  
-Refer to Figure 5-9. Using the midpoint method, the price elasticity of demand between point A and point B is

Accepted Answer

A)  0.33. 
B)  0.5. 
C)  2.0. 
D)  3.0. 
A)  0.33. 
B)  0.5. 
C)  2.0. 
D)  3.0.

Question 16

The demand for gasoline will respond more to a change in price over a period of five weeks than over a period of five years.

Accepted Answer

A) True 
 B)False

Question 17

If the price elasticity of demand for a good is 6, then a 3 percent decrease in price results in

Accepted Answer

A)  a 20 percent increase in the quantity demanded. 
B)  an 18 percent increase in the quantity demanded. 
C)  a 2 percent increase in the quantity demanded. 
D)  a 1.8 percent increase in the quantity demanded. 
A)  a 20 percent increase in the quantity demanded. 
B)  an 18 percent increase in the quantity demanded. 
C)  a 2 percent increase in the quantity demanded. 
D)  a 1.8 percent increase in the quantity demanded.

Question 18

Figure 5-18  
-Refer to Figure 5-18. Using the midpoint method, what is the price elasticity of supply between $5 and $6?

Accepted Answer

A)  0.60 
B)  0.64 
C)  1.57 
D)  1.67 
A)  0.60 
B)  0.64 
C)  1.57 
D)  1.67

Question 19

If the demand for donuts is elastic, then a decrease in the price of donuts will

Accepted Answer

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

Question 20

If a 15% change in price results in a 20% 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.

Exam 5: Elasticity and Its Application

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?

If a 6% decrease in price for a good results in a 2% increase in quantity demanded, the price elasticity of demand is

Figure 5-4 -Refer to Figure 5-4. Assume the section of the demand curve from B to C corresponds to prices between $0 and $15. Then, when the price changes between $7 and $9,

If the price elasticity of demand for a good is 0.4, then which of the following events is consistent with a 2 percent decrease in the quantity of the good demanded?

The price elasticity of demand measures how much

The midpoint method is used to compute elasticity because it

Assume that a 4 percent increase in income results in a 2 percent increase in the quantity demanded of a good. The income elasticity of demand for the good is

Suppose that an increase in the price of melons from $1.30 to $1.80 per pound increases the quantity of melons that melon farmers produce from 1.2 million pounds to 1.6 million pounds. Using the midpoint method, what is the approximate value of the price elasticity of supply?

Suppose that corn farmers want to increase their total revenue. Knowing that the demand for corn is inelastic, corn farmers should

Table 5-5 -Refer to Table 5-5. When price is between $5 and $9, demand is

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 price will be

The midpoint method for calculating elasticities is convenient in that it allows us to

Between 1950 and today there was a

Figure 5-9 -Refer to Figure 5-9. Using the midpoint method, the price elasticity of demand between point A and point B is

The demand for gasoline will respond more to a change in price over a period of five weeks than over a period of five years.

If the price elasticity of demand for a good is 6, then a 3 percent decrease in price results in

Figure 5-18 -Refer to Figure 5-18. Using the midpoint method, what is the price elasticity of supply between $5 and $6?

If the demand for donuts is elastic, then a decrease in the price of donuts will

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

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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