Question 1

If the price elasticity of supply is zero, then

Accepted Answer

A)  supply is more elastic than it is in any other case. 
B)  the supply curve is horizontal. 
C)  the quantity supplied is the same, regardless of price. 
D)  a change in demand will cause a relatively small change in the equilibrium price. 
A)  supply is more elastic than it is in any other case. 
B)  the supply curve is horizontal. 
C)  the quantity supplied is the same, regardless of price. 
D)  a change in demand will cause a relatively small change in the equilibrium price.

Question 2

In the short run, as compared to the long run, both the price elasticity of demand and the price elasticity of supply tend to be more

Accepted Answer

The answer of In the short run, as compared to...

Question 3

Which of the following could be the price elasticity of demand for a good for which an increase in price would decrease revenue?

Accepted Answer

A)  0.6 
B)  0.9 
C)  1 
D)  2.6 
A)  0.6 
B)  0.9 
C)  1 
D)  2.6

Question 4

Charles purchases 20 basketball tickets per year when his annual income is $50,000 and 25 basketball tickets when his annual income is $60,000. Charles's income elasticity of demand for basketball ticket is

Accepted Answer

A)  0.82, and basketball tickets are a normal good. 
B)  0.82, and basketball tickets are an inferior good. 
C)  1.22, and basketball tickets are a normal good. 
D)  1.22, and basketball tickets are an inferior good. 
A)  0.82, and basketball tickets are a normal good. 
B)  0.82, and basketball tickets are an inferior good. 
C)  1.22, and basketball tickets are a normal good. 
D)  1.22, and basketball tickets are an inferior good.

Question 5

For a good that is a luxury, demand

Accepted Answer

A)  tends to be inelastic. 
B)  tends to be elastic. 
C)  has unit elasticity. 
D)  cannot be represented by a demand curve in the usual way. 
A)  tends to be inelastic. 
B)  tends to be elastic. 
C)  has unit elasticity. 
D)  cannot be represented by a demand curve in the usual way.

Question 6

A good will have a more inelastic demand, the

Accepted Answer

A)  greater the availability of close substitutes. 
B)  broader the definition of the market. 
C)  longer the period of time. 
D)  more it is regarded as a luxury. 
A)  greater the availability of close substitutes. 
B)  broader the definition of the market. 
C)  longer the period of time. 
D)  more it is regarded as a luxury.

Question 7

Goods with close substitutes tend to have more elastic demands than do goods without close substitutes.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

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

Question 9

If the price of milk rises, when is the price elasticity of demand likely to be the lowest?

Accepted Answer

A)  immediately after the price increase 
B)  one month after the price increase 
C)  three months after the price increase 
D)  one year after the price increase 
A)  immediately after the price increase 
B)  one month after the price increase 
C)  three months after the price increase 
D)  one year after the price increase

Question 10

Suppose that quantity demand rises by 10% as a result of a 15% decrease in price. The price elasticity of demand for this good is

Accepted Answer

A)  inelastic and equal to 0.67. 
B)  elastic and equal to 0.67. 
C)  inelastic and equal to 1.50. 
D)  elastic and equal to 1.50. 
A)  inelastic and equal to 0.67. 
B)  elastic and equal to 0.67. 
C)  inelastic and equal to 1.50. 
D)  elastic and equal to 1.50.

Question 11

For a good that is a necessity, demand

Accepted Answer

A)  tends to be inelastic. 
B)  tends to be elastic. 
C)  has unit elasticity. 
D)  cannot be represented by a demand curve in the usual way. 
A)  tends to be inelastic. 
B)  tends to be elastic. 
C)  has unit elasticity. 
D)  cannot be represented by a demand curve in the usual way.

Question 12

If a change in the price of a good results in no change in total revenue, then

Accepted Answer

A)  the demand for the good must be elastic. 
B)  the demand for the good must be inelastic. 
C)  the demand for the good must be unit elastic. 
D)  buyers must not respond very much to a change in price. 
A)  the demand for the good must be elastic. 
B)  the demand for the good must be inelastic. 
C)  the demand for the good must be unit elastic. 
D)  buyers must not respond very much to a change in price.

Question 13

Figure 5-19  
-Refer to Figure 5-19. Which of the following statements is correct?

Accepted Answer

A)  Supply curve A is perfectly elastic. 
B)  Supply curve B is perfectly inelastic. 
C)  Supply curve C is more inelastic than supply curve D. 
D)  Supply curve D is unit elastid. 
A)  Supply curve A is perfectly elastic. 
B)  Supply curve B is perfectly inelastic. 
C)  Supply curve C is more inelastic than supply curve D. 
D)  Supply curve D is unit elastid.

Question 14

With regard to elasticity, as a firm nears its production capacity, supply becomes more

Accepted Answer

The answer of With regard to elasticity, as a firm...

Question 15

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

Accepted Answer

A)  5.3. 
B)  2.8. 
C)  0.8. 
D)  0.36. 
A)  5.3. 
B)  2.8. 
C)  0.8. 
D)  0.36.

Question 16

Figure 5-12  
-Refer to Figure 5-12. Using the midpoint method, the price elasticity of demand between point Y and point Z is

Accepted Answer

A)  0.5. 
B)  1.0. 
C)  0.75. 
D)  1.3. 
A)  0.5. 
B)  1.0. 
C)  0.75. 
D)  1.3.

Question 17

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 price 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 18

How does the concept of elasticity allow us to improve upon our understanding of supply and demand?

Accepted Answer

A)  Elasticity allows us to analyze supply and demand with greater precision than would be the case in the absence of the elasticity concept. 
B)  Elasticity provides us with a better rationale for statements such as "an increase in x will lead to a decrease in y" than we would have in the absence of the elasticity concept. 
C)  Without elasticity, we would not be able to address the direction in which price is likely to move in response to a surplus or a shortage. 
D)  Without elasticity, it is very difficult to assess the degree of competition within a market. 
A)  Elasticity allows us to analyze supply and demand with greater precision than would be the case in the absence of the elasticity concept. 
B)  Elasticity provides us with a better rationale for statements such as "an increase in x will lead to a decrease in y" than we would have in the absence of the elasticity concept. 
C)  Without elasticity, we would not be able to address the direction in which price is likely to move in response to a surplus or a shortage. 
D)  Without elasticity, it is very difficult to assess the degree of competition within a market.

Question 19

Figure 5-9  
-Refer to Figure 5-9. If the price falls from point A to point B, 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 20

When the price of chai tea lattés is $5, Maxine buys 20 per month. When the price is $4, she buys 30 per month. Maxine's demand for chai tea lattés is

Accepted Answer

A)  elastic, and her demand curve would be relatively flat. 
B)  elastic, and her demand curve would be relatively steep. 
C)  inelastic, and her demand curve would be relatively flat. 
D)  inelastic, and her demand curve would be relatively steep. 
A)  elastic, and her demand curve would be relatively flat. 
B)  elastic, and her demand curve would be relatively steep. 
C)  inelastic, and her demand curve would be relatively flat. 
D)  inelastic, and her demand curve would be relatively steep.

Exam 5: Elasticity and Its Application

If the price elasticity of supply is zero, then

In the short run, as compared to the long run, both the price elasticity of demand and the price elasticity of supply tend to be more

Which of the following could be the price elasticity of demand for a good for which an increase in price would decrease revenue?

Charles purchases 20 basketball tickets per year when his annual income is $50,000 and 25 basketball tickets when his annual income is $60,000. Charles's income elasticity of demand for basketball ticket is

For a good that is a luxury, demand

A good will have a more inelastic demand, the

Goods with close substitutes tend to have more elastic demands than do goods without close substitutes.

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

If the price of milk rises, when is the price elasticity of demand likely to be the lowest?

Suppose that quantity demand rises by 10% as a result of a 15% decrease in price. The price elasticity of demand for this good is

For a good that is a necessity, demand

If a change in the price of a good results in no change in total revenue, then

Figure 5-19 -Refer to Figure 5-19. Which of the following statements is correct?

With regard to elasticity, as a firm nears its production capacity, supply becomes more

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

Figure 5-12 -Refer to Figure 5-12. Using the midpoint method, the price elasticity of demand between point Y and point Z 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 equilibrium price will

How does the concept of elasticity allow us to improve upon our understanding of supply and demand?

Figure 5-9 -Refer to Figure 5-9. If the price falls from point A to point B, total revenue

When the price of chai tea lattés is $5, Maxine buys 20 per month. When the price is $4, she buys 30 per month. Maxine's demand for chai tea lattés 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

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