Question 1

Figure 5-8
  ​
-Refer to Figure 5-21. Using the midpoint method, what is the price elasticity of supply between $5 and $15?

Accepted Answer

The price ...

Question 2

If we observe that when consumers' incomes rise by 10%, the quantity demanded of ice cream increases by 5%, then ice cream is an inferior good.

Accepted Answer

A) True 
 B)False

Question 3

The demand for Rice Krispies is more elastic than the demand for cereal in general.

Accepted Answer

A) True 
 B)False

Question 4

If a supply curve is horizontal, then supply is said to be perfectly elastic, and the price elasticity of supply approaches infinity.

Accepted Answer

A) True 
 B)False

Question 5

If the price elasticity of demand for a good is 5, then a 10 percent increase in price results in a

Accepted Answer

A)  0.50 percent decrease in the quantity demanded.
B)  2.00 percent decrease in the quantity demanded.
C)  50.00 percent decrease in the quantity demanded.
D)  100.00 percent decrease in the quantity demanded.E) None of the above
F) All of the above

Question 6

A discovery that increases wheat yields per acre helps farmers by increasing both supply and total revenues.

Accepted Answer

A) True 
 B)False

Question 7

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

Question 8

A "Just Say No" drug education policy that successfully educates consumers to reduce their demand for drugs will lower drug prices and reduce the quantity of drugs demanded.

Accepted Answer

A) True 
 B)False

Question 9

Even the demand for a necessity such as gasoline will respond to a change in price, especially over a longer time horizon.

Accepted Answer

A) True 
 B)False

Question 10

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 11

Figure 5-1
 
-Refer to Figure 5-1. Between point A and point B, price elasticity of demand is equal to

Accepted Answer

A)  0.33.
B)  0.67.
C)  1.5.
D)  2.67.E) B) and C)
F) C) and D)

Question 12

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

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

Question 13

The midpoint method is used to calculate elasticity between two points because it gives the same answer regardless of the direction of the change.

Accepted Answer

A) True 
 B)False

Question 14

The measure of how willing consumers are to buy less of a good as its price rises is called

Accepted Answer

price elas...

Question 15

Price elasticity of supply measures how much the quantity supplied responds to changes in the price.

Accepted Answer

A) True 
 B)False

Question 16

Assume that a 4 percent increase in income results in a 2 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 a normal good.
D)  positive, and the good is an inferior good.E) A) and D)
F) None of the above

Question 17

A government program that pays farmers not to plant corn on part of their land can help farmers not only through the subsidy payments to farmers who participate in the program but also by raising the market price of corn.

Accepted Answer

A) True 
 B)False

Question 18

The cross-price elasticity of demand for bacon and eggs likely would be negative because bacon and eggs are complements for many people.

Accepted Answer

A) True 
 B)False

Question 19

Suppose that when the price rises by 10% for a particular good, the quantity demanded of that good falls by 20%. The price elasticity of demand for this good is equal to 2.0.

Accepted Answer

A) True 
 B)False

Question 20

Demarcus says that he will spend exactly $25 each month on new apps for his mobile device, regardless of the price of apps. Demarcus's demand for apps is

Accepted Answer

A)  perfectly elastic.
B)  unit elastic.
C)  perfectly inelastic.
D)  somewhat inelastic, but not perfectly inelastic.E) A) and B)
F) A) and C)

Exam 5: Elasticity and Its Application

Figure 5-8 ​ -Refer to Figure 5-21. Using the midpoint method, what is the price elasticity of supply between $5 and $15?

Correct AnswerverifiedThe price ...View AnswerShow Answer

Suppose that when the price rises by 10% for a particular good, the quantity demanded of that good falls by 20%. The price elasticity of demand for this good is equal to 2.0.

Correct AnswerverifiedShow Answer

The cross-price elasticity of demand for bacon and eggs likely would be negative because bacon and eggs are complements for many people.

Correct AnswerverifiedShow Answer

If a supply curve is horizontal, then supply is said to be perfectly elastic, and the price elasticity of supply approaches infinity.

Correct AnswerverifiedShow Answer

The measure of how willing consumers are to buy less of a good as its price rises is called

Correct Answerverifiedprice elas...View AnswerShow Answer

Demarcus says that he will spend exactly $25 each month on new apps for his mobile device, regardless of the price of apps. Demarcus's demand for apps is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A discovery that increases wheat yields per acre helps farmers by increasing both supply and total revenues.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 5-1 -Refer to Figure 5-1. Between point A and point B, price elasticity of demand is equal to

Correct AnswerverifiedShow Answer

Price elasticity of supply measures how much the quantity supplied responds to changes in the price.

Correct AnswerverifiedShow Answer

A government program that pays farmers not to plant corn on part of their land can help farmers not only through the subsidy payments to farmers who participate in the program but also by raising the market price of corn.

Correct AnswerverifiedShow Answer

The demand for Rice Krispies is more elastic than the demand for cereal in general.

Correct AnswerverifiedShow Answer

Assume that a 4 percent increase in income results in a 2 percent increase in the quantity demanded of a good. The income elasticity of demand for the good is

Correct AnswerverifiedShow Answer

Even the demand for a necessity such as gasoline will respond to a change in price, especially over a longer time horizon.

Correct AnswerverifiedShow Answer

If the price elasticity of demand for a good is 5, then a 10 percent increase in price results in a

Correct AnswerverifiedShow Answer

The midpoint method is used to calculate elasticity between two points because it gives the same answer regardless of the direction of the change.

Correct AnswerverifiedShow Answer

If we observe that when consumers' incomes rise by 10%, the quantity demanded of ice cream increases by 5%, then ice cream is an inferior good.

Correct AnswerverifiedShow Answer

A "Just Say No" drug education policy that successfully educates consumers to reduce their demand for drugs will lower drug prices and reduce the quantity of drugs demanded.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 5-8 -Refer to Figure 5-21. Using the midpoint method, what is the price elasticity of supply between $5 and $15?

Correct Answer
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The price ...
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price elas...
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