Question 1

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) None of the above
F) All of the above C

Question 2

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.E) B) and D)
F) None of the above

Question 3

A key determinant of the price elasticity of supply is

Accepted Answer

A)  the ability of sellers to change the price of the good they produce.
B)  the ability of sellers to change the amount of the good they produce.
C)  how responsive buyers are to changes in sellers' prices.
D)  the slope of the demand curve.E) A) and B)
F) A) and C)

Question 4

The price elasticity of demand for mobile phones

Accepted Answer

A)  will be higher if there is an improvement in the production technology.
B)  will be lower if consumers perceive mobile phones to be a necessity.
C)  is computed as the percentage change in the price of mobile phones divided by the percentage change in quantity of mobile phones.
D)  All of the above are correct.E) C) and D)
F) All of the above

Question 5

Figure 5-4 
-Refer to Figure 5-4. The section of the demand curve from B to C represents the

Accepted Answer

A)  elastic section of the demand curve.
B)  perfectly elastic section of the demand curve.
C)  unit elastic section of the demand curve.
D)  inelastic section of the demand curve.E) A) and B)
F) All of the above

Question 6

Suppose demand is given by the equation:  At what point along this demand curve will total revenue be maximized?

Accepted Answer

Total revenue is con...

Question 7

If the price elasticity of demand is equal to 0, then demand is unit elastic.

Accepted Answer

A) True 
 B)False

Question 8

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 9

Which of the following expressions represents a cross-price elasticity of demand?

Accepted Answer

A)  percentage change in quantity demanded of bread divided by percentage change in quantity supplied of bread
B)  percentage change in quantity demanded of bread divided by percentage change in price of butter
C)  percentage change in price of bread divided by percentage change in quantity demanded of bread
D)  percentage change in quantity demanded of bread divided by percentage change in incomeE) A) and D)
F) All of the above

Question 10

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) A) and D)
F) A) and C) C

Question 11

If we observe that when the price of chocolate candy bars increases by 10%, quantity demanded decreases total by 10%, then the demand for chocolate candy bars is unit price elastic.

Accepted Answer

A) True 
 B)False

Question 12

Suppose a market has the demand function Qd=20-0.5P. Using the midpoint method, what is the price elasticity of demand between $30 and $40?

Accepted Answer

Question 13

-Refer to Table 5-2. Using the midpoint method, if the price falls from $100 to $50, the absolute value of the price elasticity of demand is

Accepted Answer

A)  0.31.
B)  0.46.
C)  1.25.
D)  2.17E) B) and C)
F) C) and D)

Question 14

As we move downward and to the right along a linear, downward-sloping demand curve,

Accepted Answer

A)  both slope and elasticity remain constant.
B)  slope changes but elasticity remains constant.
C)  both slope and elasticity change.
D)  slope remains constant but elasticity changes.E) None of the above
F) B) and C)

Question 15

Suppose that when the price of good X falls from $10 to $8, the quantity demanded of good Y rises from 20 units to 25 units. Using the midpoint method, the cross-price elasticity of demand is

Accepted Answer

A)  -1.0, and X and Y are complements.
B)  -1.0, and X and Y are substitutes.
C)  1.0, and X and Y are complements.
D)  1.0, and X and Y are substitutes.E) B) and C)
F) A) and D) A

Question 16

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 17

If the price of calculators increases by 15% and the quantity demanded per week falls by 45% as a result, then the price elasticity of demand is 3.

Accepted Answer

A) True 
 B)False

Question 18

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 a luxury and B is a necessity.
B)  A is a good after an increase in income and B is that same good after a decrease in income.
C)  A has fewer substitutes than B.
D)  A is a good immediately after a price increase and B is that same good 3 years after the price increase.E) B) and C)
F) A) and B)

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Table 5-6 
-Refer to Table 5-6. As price rises from $10 to $15, the price elasticity of demand using the midpoint method is approximately

Accepted Answer

A)  0.40.
B)  0.56.
C)  1.80.
D)  2.50.E) B) and C)
F) None of the above

Exam 5: Elasticity and Its Application

A key determinant of the price elasticity of supply is the

Correct Answer
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C

When demand is unit elastic, price elasticity of demand equals

Correct Answer
verified

A key determinant of the price elasticity of supply is

Correct Answer
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The price elasticity of demand for mobile phones

Correct Answer
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Figure 5-4 -Refer to Figure 5-4. The section of the demand curve from B to C represents the

Correct Answer
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Suppose demand is given by the equation: At what point along this demand curve will total revenue be maximized?

Correct Answer
verified
Total revenue is con...
View Answer

If the price elasticity of demand is equal to 0, then demand is unit elastic.

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

Correct Answer
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Which of the following expressions represents a cross-price elasticity of demand?

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

Correct Answer
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C

If we observe that when the price of chocolate candy bars increases by 10%, quantity demanded decreases total by 10%, then the demand for chocolate candy bars is unit price elastic.

Correct Answer
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Suppose a market has the demand function Q^d=20-0.5P. Using the midpoint method, what is the price elasticity of demand between $30 and $40?

Correct Answer
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-Refer to Table 5-2. Using the midpoint method, if the price falls from $100 to $50, the absolute value of the price elasticity of demand is

Correct Answer
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As we move downward and to the right along a linear, downward-sloping demand curve,

Correct Answer
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Suppose that when the price of good X falls from $10 to $8, the quantity demanded of good Y rises from 20 units to 25 units. Using the midpoint method, the cross-price elasticity of demand is

Correct Answer
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A

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In the section of the demand curve from ...
View Answer

If the price of calculators increases by 15% and the quantity demanded per week falls by 45% as a result, then the price elasticity of demand is 3.

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

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

Correct Answer
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Table 5-6 -Refer to Table 5-6. As price rises from $10 to $15, the price elasticity of demand using the midpoint method is approximately

Correct Answer
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Exam 5: Elasticity and Its Application

A key determinant of the price elasticity of supply is the

Correct AnswerverifiedC

When demand is unit elastic, price elasticity of demand equals

Correct AnswerverifiedShow Answer

A key determinant of the price elasticity of supply is

Correct AnswerverifiedShow Answer

The price elasticity of demand for mobile phones

Correct AnswerverifiedShow Answer

Figure 5-4 -Refer to Figure 5-4. The section of the demand curve from B to C represents the

Correct AnswerverifiedShow Answer

Suppose demand is given by the equation: At what point along this demand curve will total revenue be maximized?

Correct AnswerverifiedTotal revenue is con...View AnswerShow Answer

If the price elasticity of demand is equal to 0, then demand is unit elastic.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following expressions represents a cross-price elasticity of demand?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedC

If we observe that when the price of chocolate candy bars increases by 10%, quantity demanded decreases total by 10%, then the demand for chocolate candy bars is unit price elastic.

Correct AnswerverifiedShow Answer

Suppose a market has the demand function Qd=20-0.5P. Using the midpoint method, what is the price elasticity of demand between $30 and $40?

Correct AnswerverifiedShow Answer

-Refer to Table 5-2. Using the midpoint method, if the price falls from $100 to $50, the absolute value of the price elasticity of demand is

Correct AnswerverifiedShow Answer

As we move downward and to the right along a linear, downward-sloping demand curve,

Correct AnswerverifiedShow Answer

Suppose that when the price of good X falls from $10 to $8, the quantity demanded of good Y rises from 20 units to 25 units. Using the midpoint method, the cross-price elasticity of demand is

Correct AnswerverifiedA

Correct AnswerverifiedIn the section of the demand curve from ...View AnswerShow Answer

If the price of calculators increases by 15% and the quantity demanded per week falls by 45% as a result, then the price elasticity of demand is 3.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Table 5-6 -Refer to Table 5-6. As price rises from $10 to $15, the price elasticity of demand using the midpoint method is approximately

Correct AnswerverifiedShow Answer

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C

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Total revenue is con...
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C

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Suppose a market has the demand function Q^d=20-0.5P. Using the midpoint method, what is the price elasticity of demand between $30 and $40?

Correct Answer
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A

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In the section of the demand curve from ...
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