Question 1

The smaller the price elasticity of demand, the

Accepted Answer

A)   more likely the product is a luxury.
B)   smaller the responsiveness of quantity demanded to a change in price.
C)   more substitutes the product has.
D)   greater the responsiveness of quantity demanded to a change in price.E) A) and B)
F) None of the above

Question 2

Which of the following should be held constant when calculating an income elasticity of demand?

Accepted Answer

A)   the quantity of the good demanded
B)   the price of the good
C)   income
D)   All of the above should be held constant.E) None of the above
F) B) and C)

Question 3

Figure 5-20 
-Refer to Figure 5-20. Which supply curve is most likely relevant over a very long period of time?

Accepted Answer

A)   S1
B)   S2
C)   S3
D)   All of the above are equally likely to be relevant over a very long period of time.E) B) and C)
F) All of the above

Question 4

Elasticity of demand is closely related to the slope of the demand curve. The more responsive buyers are to a change in price, the

Accepted Answer

A)   steeper the demand curve will be.
B)   flatter the demand curve will be.
C)   further to the right the demand curve will sit.
D)   closer to the vertical axis the demand curve will sit.E) A) and D)
F) A) and C)

Question 5

The federal government is concerned about obesity in the United States. Congress is considering two plans. One will ban the production and sale of "junk food." The other will increase nutrition­education programs and include substantial advertising campaigns to encourage healthy eating habits. The junk-food ban program

Accepted Answer

A)   and the education program will reduce the quantity of junk food sold and raise the price.
B)   and the education program will reduce the quantity of junk food sold and lower the price.
C)   will reduce the quantity of junk food sold and raise the price. The education program will reduce the quantity of junk food sold and lower the price.
D)   will reduce the quantity of junk food sold and lower the price. The education program will reduce the quantity of junk food sold and raise the price.E) B) and D)
F) A) and B)

Question 6

For a particular good, a 3 percent increase in price causes a 10 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Accepted Answer

A)   The relevant time horizon is short.
B)   The good is a necessity.
C)   The market for the good is broadly defined.
D)   There are many close substitutes for this good.E) B) and C)
F) None of the above

Question 7

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.E) All of the above
F) None of the above

Question 8

If the price of gasoline rises, when is the price elasticity of demand likely to be the highest?

Accepted Answer

A)   immediately after the price increases
B)   one month after the price increase
C)   three months after the price increase
D)   one year after the price increaseE) A) and C)
F) All of the above

Question 9

You are in charge of the local city-owned aquatic center. You need to increase the revenue generated by the aquatic center to meet expenses. The mayor advises you to increase the price of a day pass. The city manager recommends reducing the price of a day pass. You realize that

Accepted Answer

A)   the mayor thinks demand is elastic, and the city manager thinks demand is inelastic.
B)   both the mayor and the city manager think that demand is elastic.
C)   both the mayor and the city manager think that demand is inelastic.
D)   the mayor thinks demand is inelastic, and the city manager thinks demand is elastic.E) C) and D)
F) A) and B)

Question 10

The production of methamphetamine meth)  is a social problem in the Midwest. Iowa is considering two potential programs: Operation Methbust would increase the number of sheriffs' deputies to search out and destroy methamphetamine labs. Operation Say No to Meth would increase the training required of public school teachers so that they could better educate students about the health risks of using meth. Assuming that each program were successful, which of the following statements is correct?

Accepted Answer

A)   Both Operation Methbust and Say No would reduce the demand for meth.
B)   Both Operation Methbust and Say No would reduce the supply of meth.
C)   Operation Methbust would reduce the demand for meth; Operation Say No would reduce the supply of meth.
D)   Operation Methbust would reduce the supply of meth; Operation Say No would reduce the demand for meth.E) A) and B)
F) All of the above

Question 11

If the demand for textbooks is inelastic, then an increase in the price of textbooks will

Accepted Answer

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

Question 12

If two goods are complements, their cross-price elasticity will be

Accepted Answer

A)   positive.
B)   negative.
C)   zero.
D)   equal to the difference between the income elasticities of demand for the two goods.E) C) and D)
F) B) and D)

Question 13

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 14

Figure 5-11  A: The Elasticity of Demand
-Refer to Figure 5-11. A decrease in price from $20 to $10 leads to a

Accepted Answer

A)   decrease in total revenue of $200, so the price elasticity of demand is greater than 1 in this price range.
B)   decrease in total revenue of $200, so the price elasticity of demand is less than 1 in this price range.
C)   decrease in total revenue of $120, so the price elasticity of demand is less than 1 in this price range.
D)   decrease in total revenue of $120, so demand is elastic in this price range.E) B) and D)
F) C) and D)

Question 15

Figure 5-17 
-Refer to Figure 5-17. Using the midpoint method, what is the price elasticity of supply between point B and point C?

Accepted Answer

A)   1.44
B)   1.29
C)   0.96
D)   0.69E) None of the above
F) B) and C)

Question 16

Figure 5-14 
-Refer to Figure 5-14. Using the midpoint method, what is the price elasticity of supply between $100 and $220?

Accepted Answer

A)   0.58
B)   0.67
C)   1.00
D)   1.73E) None of the above
F) B) and C)

Question 17

Why was OPEC unable to maintain high oil prices in the long run?

Accepted Answer

A)   Demand and supply are both elastic in the long run compared to the short run.
B)   Demand and supply are both inelastic in the long run compared to the short run.
C)   Demand is elastic and supply is inelastic in the long run compared to the short run.
D)   Demand is inelastic and supply is elastic in the long run compared to the short run.E) A) and D)
F) None of the above

Question 18

A key determinant of the price elasticity of supply is the

Accepted Answer

A)   number of close substitutes for the good in question.
B)   extent to which buyers alter their quantities demanded in response to changes in prices.
C)   length of the time period.
D)   extent to which buyers alter their quantities demanded in response to changes in their incomes.E) A) and B)
F) A) and C)

Question 19

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.E) A) and B)
F) All of the above

Question 20

If a 10% decrease in price for a good results in a 20% increase in quantity demanded, the price elasticity of demand is

Accepted Answer

A)   0.50.
B)   1.
C)   1.5.
D)   2.E) All of the above
F) A) and B)

Exam 5: Elasticity and Its Application

Figure 5-20 -Refer to Figure 5-20. Which supply curve is most likely relevant over a very long period of time?

Correct Answer
verified

If the demand for textbooks is inelastic, then an increase in the price of textbooks will

Correct Answer
verified

Figure 5-17 -Refer to Figure 5-17. Using the midpoint method, what is the price elasticity of supply between point B and point C?

Correct Answer
verified

Why was OPEC unable to maintain high oil prices in the long run?

Correct Answer
verified

Figure 5-11 A: The Elasticity of Demand -Refer to Figure 5-11. A decrease in price from $20 to $10 leads to a

Correct Answer
verified

Correct Answer
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Figure 5-14 -Refer to Figure 5-14. Using the midpoint method, what is the price elasticity of supply between $100 and $220?

Correct Answer
verified

Elasticity of demand is closely related to the slope of the demand curve. The more responsive buyers are to a change in price, the

Correct Answer
verified

Which of the following should be held constant when calculating an income elasticity of demand?

Correct Answer
verified

A key determinant of the price elasticity of supply is the

Correct Answer
verified

If two goods are complements, their cross-price elasticity will be

Correct Answer
verified

If the price of gasoline rises, when is the price elasticity of demand likely to be the highest?

Correct Answer
verified

You are in charge of the local city-owned aquatic center. You need to increase the revenue generated by the aquatic center to meet expenses. The mayor advises you to increase the price of a day pass. The city manager recommends reducing the price of a day pass. You realize that

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

The smaller the price elasticity of demand, the

Correct Answer
verified

If a 10% decrease in price for a good results in a 20% increase in quantity demanded, the price elasticity of demand is

Correct Answer
verified

For a particular good, a 3 percent increase in price causes a 10 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Correct Answer
verified

Exam 5: Elasticity and Its Application

Figure 5-20 -Refer to Figure 5-20. Which supply curve is most likely relevant over a very long period of time?

Correct AnswerverifiedShow Answer

If the demand for textbooks is inelastic, then an increase in the price of textbooks will

Correct AnswerverifiedShow Answer

Figure 5-17 -Refer to Figure 5-17. Using the midpoint method, what is the price elasticity of supply between point B and point C?

Correct AnswerverifiedShow Answer

Why was OPEC unable to maintain high oil prices in the long run?

Correct AnswerverifiedShow Answer

Figure 5-11 A: The Elasticity of Demand -Refer to Figure 5-11. A decrease in price from $20 to $10 leads to a

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 5-14 -Refer to Figure 5-14. Using the midpoint method, what is the price elasticity of supply between $100 and $220?

Correct AnswerverifiedShow Answer

Elasticity of demand is closely related to the slope of the demand curve. The more responsive buyers are to a change in price, the

Correct AnswerverifiedShow Answer

Which of the following should be held constant when calculating an income elasticity of demand?

Correct AnswerverifiedShow Answer

A key determinant of the price elasticity of supply is the

Correct AnswerverifiedShow Answer

If two goods are complements, their cross-price elasticity will be

Correct AnswerverifiedShow Answer

If the price of gasoline rises, when is the price elasticity of demand likely to be the highest?

Correct AnswerverifiedShow Answer

You are in charge of the local city-owned aquatic center. You need to increase the revenue generated by the aquatic center to meet expenses. The mayor advises you to increase the price of a day pass. The city manager recommends reducing the price of a day pass. You realize that

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The smaller the price elasticity of demand, the

Correct AnswerverifiedShow Answer

If a 10% decrease in price for a good results in a 20% increase in quantity demanded, the price elasticity of demand is

Correct AnswerverifiedShow Answer

For a particular good, a 3 percent increase in price causes a 10 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Correct AnswerverifiedShow Answer

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