Question 1

Figure 5-18 
-Refer to Figure 5-18. Using the midpoint method, what is the price elasticity of supply between $4 and $5?

Accepted Answer

A)  0.50
B)  0.56
C)  1.80
D)  2.00E) A) and B)
F) A) and C)

Question 2

In the long run, the quantity supplied of most goods

Accepted Answer

A)  will increase in almost all cases, regardless of what happens to price.
B)  cannot respond at all to a change in price.
C)  can respond to a change in price, but the change is almost always inconsequential.
D)  can respond substantially to a change in price.E) None of the above
F) A) and B)

Question 3

A drug interdiction program that successfully reduces the supply of illegal drugs in the United States likely will

Accepted Answer

A)  raise the price, reduce the quantity, decrease total revenues, and decrease crime.
B)  lower the price, increase the quantity, increase total revenues, and increase crime.
C)  raise the price, increase the quantity, decrease total revenues, and increase crime.
D)  raise the price, reduce the quantity, increase total revenues, and increase crime.E) A) and B)
F) All of the above

Question 4

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 elastic.E) B) and D)
F) B) and C)

Question 5

-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.E) C) and D)
F) A) and B)

Question 6

For a particular good, a 12 percent increase in price causes a 3 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Accepted Answer

A)  There are many substitutes for this good.
B)  The good is a necessity.
C)  The market for the good is narrowly defined.
D)  The relevant time horizon is long.E) B) and C)
F) A) and D)

Question 7

Which of the following statements is valid when supply is perfectly elastic at a price of $4?

Accepted Answer

A)  The elasticity of supply approaches infinity.
B)  The supply curve is vertical.
C)  At a price below $4, quantity supplied is infinite.
D)  At a price above $4, quantity supplied is zero.E) C) and D)
F) B) and C)

Question 8

Maddy purchases 2 pounds of beans and 3 pounds of rice per month when the price of beans is $2 per pound. She purchases 1 pounds of beans and 4 pounds of rice per month when the price of beans is $3 per pound. Maddy's cross-price elasticity of demand for beans and rice is

Accepted Answer

A)  0.71, and they are substitutes.
B)  -0.71, and they are complements.
C)  1.4, and they are substitutes.
D)  -1.4, and they are complements.E) B) and C)
F) A) and D)

Question 9

Table 5-10
​
​  ​
-Refer to Table 5-10. Using the midpoint method, which of the three supply curves has the most elastic price elasticity of supply?

Accepted Answer

A)  Supply curve X
B)  Supply curve Y
C)  Supply curve Z
D)  There is no difference in the elasticity of the three supply curves.E) A) and C)
F) A) and B)

Question 10

In general, demand curves for luxuries tend to be price elastic.

Accepted Answer

A) True 
 B)False

Question 11

Table 5-9
​ 
-Refer to Table 5-9. Which of the three supply curves represents the least elastic supply?

Accepted Answer

A)  supply curve A
B)  supply curve B
C)  supply curve C
D)  There is no difference in the elasticity of the three supply curves.E) C) and D)
F) A) and B)

Question 12

If the price elasticity of supply is 0.8, and price increased by 5%, quantity supplied would

Accepted Answer

A)  increase by 4%.
B)  increase by 6.25%.
C)  decrease by 4%.
D)  decrease by 6.25%.E) B) and C)
F) C) and D)

Question 13

Figure 5-15 
-Refer to Figure 5-15. Along which of these segments of the supply curve is supply most elastic?

Accepted Answer

A)  AB
B)  CD
C)  DH
D)  GHE) C) and D)
F) A) and C)

Question 14

If the price elasticity of supply is 1.2, and price increased by 5%, quantity supplied would

Accepted Answer

A)  increase by 4.2%.
B)  increase by 6%.
C)  decrease by 4.2%.
D)  decrease by 6%.E) B) and C)
F) A) and D)

Question 15

A perfectly elastic demand implies that

Accepted Answer

A)  buyers will not respond to any change in price.
B)  any rise in price above that represented by the demand curve will result in a quantity demanded of zero.
C)  quantity demanded and price change by the same percent as we move along the demand curve.
D)  price will rise by an infinite amount when there is a change in quantity demanded.E) C) and D)
F) A) and C)

Question 16

Which of the following is likely to have the most price elastic demand?

Accepted Answer

A)  fountain ink pens
B)  milk
C)  disposable diapers
D)  shampooE) A) and D)
F) None of the above

Question 17

A t-shirt maker would be willing to supply 75 t-shirts per day at a price of $18.00 each. At a price of $20.00, the t-shirt maker would be willing to supply 100 t-shirts. Using the midpoint method, the price elasticity of supply for t-shirts is about

Accepted Answer

A)  0.37, and supply is elastic.
B)  0.37, and supply is inelastic.
C)  2.71, and supply is elastic.
D)  2.71, and supply is inelastic.E) C) and D)
F) None of the above

Question 18

Figure 5-5 
-Refer to Figure 5-5. The maximum value of total revenue corresponds to a price of

Accepted Answer

A)  $20.
B)  $50.
C)  $70.
D)  $100.E) B) and C)
F) None of the above

Question 19

Figure 5-11 1 and P2, and the corresponding quantities demanded, Q1 and Q2, for the purpose of calculating the price elasticity of demand. Also suppose P2 > P1. In which of the following cases could we possibly find that (i)  demand is elastic and (ii)  a decrease in price from P1 to P2 causes an decrease in total revenue? A) 0 1 2 1 2 1 > $20. D) None of the above is correct." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 5-11. Suppose this demand curve is a straight, downward-sloping line all the way from the horizontal intercept to the vertical intercept. We choose two prices, P1 and P2, and the corresponding quantities demanded, Q1 and Q2, for the purpose of calculating the price elasticity of demand. Also suppose P2 > P1. In which of the following cases could we possibly find that (i)  demand is elastic and (ii)  a decrease in price from P1 to P2 causes an decrease in total revenue?

Accepted Answer

A)  0 1 2 
B)  $10 1 2 
C)  P1 > $20.
D)  None of the above is correct.E) All of the above
F) None of the above

Question 20

Which of the following statements is not correct concerning government attempts to reduce the flow of illegal drugs into the country? Drug interdiction

Accepted Answer

A)  raises prices and total revenue in the drug market.
B)  can increase drug-related crime.
C)  shifts the demand curve for drugs to the left.
D)  shifts the supply curve of drugs to the left.E) A) and B)
F) None of the above

Exam 5: Elasticity and Its Application

Table 5-10 -Refer to Table 5-10. Using the midpoint method, which of the three supply curves has the most elastic price elasticity of supply?

Correct Answer
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Which of the following statements is valid when supply is perfectly elastic at a price of $4?

Correct Answer
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Figure 5-15 -Refer to Figure 5-15. Along which of these segments of the supply curve is supply most elastic?

Correct Answer
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In general, demand curves for luxuries tend to be price elastic.

Correct Answer
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A t-shirt maker would be willing to supply 75 t-shirts per day at a price of $18.00 each. At a price of $20.00, the t-shirt maker would be willing to supply 100 t-shirts. Using the midpoint method, the price elasticity of supply for t-shirts is about

Correct Answer
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Which of the following statements is not correct concerning government attempts to reduce the flow of illegal drugs into the country? Drug interdiction

Correct Answer
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Maddy purchases 2 pounds of beans and 3 pounds of rice per month when the price of beans is $2 per pound. She purchases 1 pounds of beans and 4 pounds of rice per month when the price of beans is $3 per pound. Maddy's cross-price elasticity of demand for beans and rice is

Correct Answer
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Table 5-9 -Refer to Table 5-9. Which of the three supply curves represents the least elastic supply?

Correct Answer
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Which of the following is likely to have the most price elastic demand?

Correct Answer
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Figure 5-5 -Refer to Figure 5-5. The maximum value of total revenue corresponds to a price of

Correct Answer
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-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

Correct Answer
verified

A drug interdiction program that successfully reduces the supply of illegal drugs in the United States likely will

Correct Answer
verified

A perfectly elastic demand implies that

Correct Answer
verified

If the price elasticity of supply is 1.2, and price increased by 5%, quantity supplied would

Correct Answer
verified

For a particular good, a 12 percent increase in price causes a 3 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Correct Answer
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Figure 5-18 -Refer to Figure 5-18. Using the midpoint method, what is the price elasticity of supply between $4 and $5?

Correct Answer
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Correct Answer
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In the long run, the quantity supplied of most goods

Correct Answer
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If the price elasticity of supply is 0.8, and price increased by 5%, quantity supplied would

Correct Answer
verified

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?

Correct Answer
verified

Exam 5: Elasticity and Its Application

Table 5-10 ​ ​ ​ -Refer to Table 5-10. Using the midpoint method, which of the three supply curves has the most elastic price elasticity of supply?

Correct AnswerverifiedShow Answer

Which of the following statements is valid when supply is perfectly elastic at a price of $4?

Correct AnswerverifiedShow Answer

Figure 5-15 -Refer to Figure 5-15. Along which of these segments of the supply curve is supply most elastic?

Correct AnswerverifiedShow Answer

In general, demand curves for luxuries tend to be price elastic.

Correct AnswerverifiedShow Answer

A t-shirt maker would be willing to supply 75 t-shirts per day at a price of $18.00 each. At a price of $20.00, the t-shirt maker would be willing to supply 100 t-shirts. Using the midpoint method, the price elasticity of supply for t-shirts is about

Correct AnswerverifiedShow Answer

Which of the following statements is not correct concerning government attempts to reduce the flow of illegal drugs into the country? Drug interdiction

Correct AnswerverifiedShow Answer

Maddy purchases 2 pounds of beans and 3 pounds of rice per month when the price of beans is $2 per pound. She purchases 1 pounds of beans and 4 pounds of rice per month when the price of beans is $3 per pound. Maddy's cross-price elasticity of demand for beans and rice is

Correct AnswerverifiedShow Answer

Table 5-9 ​ -Refer to Table 5-9. Which of the three supply curves represents the least elastic supply?

Correct AnswerverifiedShow Answer

Which of the following is likely to have the most price elastic demand?

Correct AnswerverifiedShow Answer

Figure 5-5 -Refer to Figure 5-5. The maximum value of total revenue corresponds to a price of

Correct AnswerverifiedShow Answer

-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

Correct AnswerverifiedShow Answer

A drug interdiction program that successfully reduces the supply of illegal drugs in the United States likely will

Correct AnswerverifiedShow Answer

A perfectly elastic demand implies that

Correct AnswerverifiedShow Answer

If the price elasticity of supply is 1.2, and price increased by 5%, quantity supplied would

Correct AnswerverifiedShow Answer

For a particular good, a 12 percent increase in price causes a 3 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Correct AnswerverifiedShow Answer

Figure 5-18 -Refer to Figure 5-18. Using the midpoint method, what is the price elasticity of supply between $4 and $5?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the long run, the quantity supplied of most goods

Correct AnswerverifiedShow Answer

If the price elasticity of supply is 0.8, and price increased by 5%, quantity supplied would

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

Table 5-10 -Refer to Table 5-10. Using the midpoint method, which of the three supply curves has the most elastic price elasticity of supply?

Correct Answer
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Table 5-9 -Refer to Table 5-9. Which of the three supply curves represents the least elastic supply?

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