Question 1

If the cross-price elasticity of two goods is positive, then the two goods are

Accepted Answer

A)   substitutes.
B)   complements.
C)   normal goods.
D)   inferior goods.E) All of the above
F) A) and B)

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) B) and D)
F) B) and C)

Question 3

For which of the following goods would demand be most price elastic: a car, a sedan, a Honda sedan, a Honda Accord, a black Honda Accord?

Accepted Answer

a black Ho...

Question 4

If a 40% change in price results in a 25% change in quantity supplied, then the price elasticity of supply is about

Accepted Answer

A)   0.63, and supply is elastic.
B)   0.63, and supply is inelastic.
C)   1.60, and supply is elastic.
D)   1.60, and supply is inelastic.E) A) and B)
F) A) and D)

Question 5

The income elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in income.

Accepted Answer

A) True 
 B)False

Question 6

Suppose good X has a negative income elasticity of demand. This implies that good X is

Accepted Answer

A)   a normal good.
B)   a necessity.
C)   an inferior good.
D)   a luxury.E) None of the above
F) A) and B)

Question 7

Table 5-3
Consider the following demand schedule.
 
-Refer to Table 5-3. Using the midpoint method, what is the price elasticity of demand between $0 and $3?

Accepted Answer

A)   0.11
B)   0.22
C)   0.40
D)   2.00E) A) and D)
F) B) and C)

Question 8

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

Accepted Answer

A)   GH
B)   CD
C)   AC
D)   ABE) A) and B)
F) A) and C)

Question 9

There are very few, if any, good substitutes for automotive tires. Therefore, the demand for automotive tires would tend to be

Accepted Answer

A)   elastic.
B)   unit elastic.
C)   inelastic.
D)   highly responsive to changes in income as well as changes in prices.E) C) and D)
F) B) and D)

Question 10

Which of the following statements is valid when the market supply curve is vertical?

Accepted Answer

A)   Market quantity supplied does not change when the price changes.
B)   Supply is perfectly elastic.
C)   An increase in market demand will increase the equilibrium quantity.
D)   An increase in market demand will not increase the equilibrium price.E) A) and B)
F) B) and D)

Question 11

Measures of elasticity enhance our ability to study the magnitudes of changes in quantities in response to changes in prices or income.

Accepted Answer

A) True 
 B)False

Question 12

Elasticity of demand is closely related to the slope of the demand curve. The less 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) C) and D)
F) All of the above

Question 13

In which of these instances is demand said to be perfectly inelastic?

Accepted Answer

A)   An increase in price of 2% causes a decrease in quantity demanded of 2%.
B)   A decrease in price of 2% causes an increase in quantity demanded of 0%.
C)   A decrease in price of 2% causes a decrease in total revenue of 0%.
D)   An increase in price of 2% causes a decrease in quantity demanded of 1/2%.E) B) and D)
F) B) and C)

Question 14

At a price of $1.20, a local coffee shop is willing to supply 100 cinnamon rolls per day. At a price of $1.40, the coffee shop would be willing to supply 150 cinnamon rolls per day. Using the midpoint method, the price elasticity of supply is about

Accepted Answer

A)   0.15
B)   0.375
C)   2.5
D)   2.60E) B) and C)
F) C) and D)

Question 15

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

Question 16

As price elasticity of supply increases, the supply curve

Accepted Answer

A)   becomes flatter.
B)   becomes steeper.
C)   becomes downward sloping.
D)   shifts to the right.E) A) and B)
F) None of the above

Question 17

When demand is perfectly inelastic, the demand curve will be

Accepted Answer

A)   negatively sloped, because buyers decrease their purchases when the price rises.
B)   vertical, because buyers purchase the same amount as before whenever the price rises or falls.
C)   positively sloped, because buyers increase their purchases when price rises.
D)   positively sloped, because buyers increase their total expenditures when price rises.E) All of the above
F) None of the above

Question 18

Figure 5-9 
-Refer to Figure 5-9. If the price rises from point D to point C, 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 inelastic.E) A) and B)
F) C) and D)

Question 19

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

Question 20

Assume that a 4 percent decrease in income results in a 6 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 an inferior good.
D)   positive, and the good is a normal good.E) B) and C)
F) A) and D)

Exam 5: Elasticity and Its Application

In the long run, the quantity supplied of most goods

Correct AnswerverifiedShow Answer

Assume that a 4 percent decrease in income results in a 6 percent increase in the quantity demanded of a good. The income elasticity of demand for the good is

Correct AnswerverifiedShow Answer

As price elasticity of supply increases, the supply curve

Correct AnswerverifiedShow Answer

If the cross-price elasticity of two goods is positive, then the two goods are

Correct AnswerverifiedShow Answer

Figure 5-9 -Refer to Figure 5-9. If the price rises from point D to point C, total revenue

Correct AnswerverifiedShow Answer

There are very few, if any, good substitutes for automotive tires. Therefore, the demand for automotive tires would tend to be

Correct AnswerverifiedShow Answer

Table 5-3 Consider the following demand schedule. -Refer to Table 5-3. Using the midpoint method, what is the price elasticity of demand between $0 and $3?

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

The midpoint method is used to compute elasticity because it

Correct AnswerverifiedShow Answer

In which of these instances is demand said to be perfectly inelastic?

Correct AnswerverifiedShow Answer

When demand is perfectly inelastic, the demand curve will be

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following statements is valid when the market supply curve is vertical?

Correct AnswerverifiedShow Answer

At a price of $1.20, a local coffee shop is willing to supply 100 cinnamon rolls per day. At a price of $1.40, the coffee shop would be willing to supply 150 cinnamon rolls per day. Using the midpoint method, the price elasticity of supply is about

Correct AnswerverifiedShow Answer

Measures of elasticity enhance our ability to study the magnitudes of changes in quantities in response to changes in prices or income.

Correct AnswerverifiedShow Answer

Suppose good X has a negative income elasticity of demand. This implies that good X is

Correct AnswerverifiedShow Answer

If a 40% change in price results in a 25% change in quantity supplied, then the price elasticity of supply is about

Correct AnswerverifiedShow Answer

The income elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in income.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

For which of the following goods would demand be most price elastic: a car, a sedan, a Honda sedan, a Honda Accord, a black Honda Accord?

Correct Answerverifieda black Ho...View AnswerShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a black Ho...
View Answer