Question 1

For which pairs of goods is the cross-price elasticity most likely to be positive?

Accepted Answer

A)   peanut butter and jelly
B)   bicycle frames and bicycle tires
C)   pens and pencils
D)   college textbooks and iPodsE) All of the above
F) A) and B)

Question 2

If the price elasticity of supply for a window manufacturer is 1.5,

Accepted Answer

A)   a 10% increase in the price of windows results in a 15% increase in the quantity of windows supplied.
B)   supply is considered to be inelastic.
C)   the manufacturer is likely operating very near capacity.
D)   All of the above are correct.E) B) and D)
F) A) and B)

Question 3

If the demand curve is linear and downward sloping, which of the following statements is not correct?

Accepted Answer

A)   Demand is more elastic on the lower part of the demand curve than on the upper part.
B)   Different pairs of points on the demand curve can result in different values of the price elasticity of demand.
C)   Different pairs of points on the demand curve result in identical values of the slope of the demand curve.
D)   Starting from a point on the upper part of the demand curve, an increase in price leads to a decrease in total revenue.E) C) and D)
F) B) and D)

Question 4

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

Accepted Answer

A)   scissors
B)   fruit
C)   music downloads
D)   toothpasteE) None of the above
F) C) and D)

Question 5

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 pens and B is pencils.
B)   A is a Snickers bar and B is a Milky Way bar.
C)   A is an airline ticket from Chicago to New York demanded by a vacationer and B is an airline ticket from Chicago to New York demanded by a business traveler.
D)   A is a bottle of water demanded by a tourist in a desert and B is a bottle of water demanded by a tourist in a rain forest.E) A) and B)
F) A) and C)

Question 6

A good will have a more elastic demand, the

Accepted Answer

A)   greater the availability of close substitutes.
B)   more broad the definition of the market.
C)   shorter the period of time.
D)   more it is regarded as a necessity.E) A) and B)
F) All of the above

Question 7

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

Accepted Answer

price elas...

Question 8

How does total revenue change as one moves downward and to the right along a linear demand curve?

Accepted Answer

A)   It always increases.
B)   It always decreases.
C)   It first increases, then decreases.
D)   It is unaffected by a movement along the demand curve.E) B) and C)
F) A) and D)

Question 9

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

Accepted Answer

A)   white chocolate chip with macadamia nut cookies
B)   Mrs. Field's chocolate chip cookies
C)   milk chocolate chip cookies
D)   cookiesE) All of the above
F) B) and C)

Question 10

Figure 5-4 
-Refer to Figure 5-4. The section of the demand curve from A to B 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) None of the above
F) A) and C)

Question 11

A perfectly inelastic demand implies that buyers

Accepted Answer

A)   decrease their purchases when the price rises.
B)   purchase the same amount as before when the price rises or falls.
C)   increase their purchases only slightly when the price falls.
D)   respond substantially to an increase in price.E) C) and D)
F) None of the above

Question 12

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

Question 13

A key determinant of the price elasticity of supply is the time period under consideration. Which of the following statements best explains this fact?

Accepted Answer

A)   Supply curves are steeper over long periods of time than over short periods of time.
B)   Buyers of goods tend to be more responsive to price changes over long periods of time than over short periods of time.
C)   The number of firms in a market tends to be more variable over long periods of time than over short periods of time.
D)   Firms prefer to change their prices in the short run rather than in the long run.E) A) and C)
F) A) and B)

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

The case of perfectly elastic demand is illustrated by a demand curve that is

Accepted Answer

A)   vertical.
B)   horizontal.
C)   downward-sloping but relatively steep.
D)   downward-sloping but relatively flat.E) A) and D)
F) B) and C)

Question 16

When the price of a bracelet was $28 each, the jewelry shop sold 128 per month. When it raised the price to $32 each, it sold 112 per month. Using the midpoint method, the price elasticity of demand for bracelets is

Accepted Answer

A)   1.14.
B)   1.
C)   0.25.
D)   0.13.E) A) and D)
F) A) and C)

Question 17

Suppose that good X has few close substitutes and that good Y has many close substitutes. Which good would you expect to have more price inelastic demand?

Accepted Answer

The answer of Suppose that good X has few close...

Question 18

Drug interdiction, which reduces the supply of drugs, may decrease drug-related crime because the demand for drugs is inelastic.

Accepted Answer

A) True 
 B)False

Question 19

Last year, Max bought 6 pairs of athletic shoes when his income was $35,000. This year, his income is $42,000, and he purchased 8 pairs of athletic shoes. Holding other factors constant, it follows that Max

Accepted Answer

A)   considers athletic shoes to be necessities.
B)   considers athletic shoes to be inferior goods.
C)   considers athletic shoes to be normal goods.
D)   has a low price elasticity of demand for athletic shoes.E) None of the above
F) All of the above

Question 20

Scenario 5-1
Suppose that when the average college student's income is $10,000 per year, the annual quantity demanded of Patty's Pizza is 50 and the annual quantity demanded of Sue's Subs is 80. Suppose that when the price of Patty's Pizza increases from $8 to $10 per pie, the quantity demanded of Sue's Subs increases from 80 to 100. Suppose also that when the average student's income increases to $12,000 per year, the annual quantity demanded of Patty's Pizza increases from 50 to 60.
-Refer to Scenario 5-1. What can you deduce about the type of good Patty's Pizza is and about the relationship between Patty's Pizza and Sue's Subs?

Accepted Answer

A)   Patty's Pizza is a normal good and Patty's Pizza and Sue's Subs are substitutes.
B)   Patty's Pizza is a normal good and Patty's Pizza and Sue's Subs are complements.
C)   Patty's Pizza is an inferior good and Patty's Pizza and Sue's Subs are substitutes.
D)   Patty's Pizza is an inferior good and Patty's Pizza and Sue's Subs are complements.E) A) and B)
F) A) and C)

Exam 5: Elasticity and Its Application

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

Correct Answer
verified
price elas...
View Answer

If the price elasticity of supply for a window manufacturer is 1.5,

Correct Answer
verified

Suppose that good X has few close substitutes and that good Y has many close substitutes. Which good would you expect to have more price inelastic demand?

Correct Answer
verified

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

Correct Answer
verified

The case of perfectly elastic demand is illustrated by a demand curve that is

Correct Answer
verified

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

Correct Answer
verified

If the demand curve is linear and downward sloping, which of the following statements is not correct?

Correct Answer
verified

When the price of a bracelet was $28 each, the jewelry shop sold 128 per month. When it raised the price to $32 each, it sold 112 per month. Using the midpoint method, the price elasticity of demand for bracelets is

Correct Answer
verified

Drug interdiction, which reduces the supply of drugs, may decrease drug-related crime because the demand for drugs is inelastic.

Correct Answer
verified

How does total revenue change as one moves downward and to the right along a linear demand curve?

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Last year, Max bought 6 pairs of athletic shoes when his income was $35,000. This year, his income is $42,000, and he purchased 8 pairs of athletic shoes. Holding other factors constant, it follows that Max

Correct Answer
verified

A good will have a more elastic demand, the

Correct Answer
verified

A perfectly inelastic demand implies that buyers

Correct Answer
verified

A key determinant of the price elasticity of supply is the time period under consideration. Which of the following statements best explains this fact?

Correct Answer
verified

For which pairs of goods is the cross-price elasticity most likely to be positive?

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Exam 5: Elasticity and Its Application

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

If the price elasticity of supply for a window manufacturer is 1.5,

Correct AnswerverifiedShow Answer

Suppose that good X has few close substitutes and that good Y has many close substitutes. Which good would you expect to have more price inelastic demand?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The case of perfectly elastic demand is illustrated by a demand curve that is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the demand curve is linear and downward sloping, which of the following statements is not correct?

Correct AnswerverifiedShow Answer

When the price of a bracelet was $28 each, the jewelry shop sold 128 per month. When it raised the price to $32 each, it sold 112 per month. Using the midpoint method, the price elasticity of demand for bracelets is

Correct AnswerverifiedShow Answer

Drug interdiction, which reduces the supply of drugs, may decrease drug-related crime because the demand for drugs is inelastic.

Correct AnswerverifiedShow Answer

How does total revenue change as one moves downward and to the right along a linear demand curve?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

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

Last year, Max bought 6 pairs of athletic shoes when his income was $35,000. This year, his income is $42,000, and he purchased 8 pairs of athletic shoes. Holding other factors constant, it follows that Max

Correct AnswerverifiedShow Answer

A good will have a more elastic demand, the

Correct AnswerverifiedShow Answer

A perfectly inelastic demand implies that buyers

Correct AnswerverifiedShow Answer

A key determinant of the price elasticity of supply is the time period under consideration. Which of the following statements best explains this fact?

Correct AnswerverifiedShow Answer

For which pairs of goods is the cross-price elasticity most likely to be positive?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
verified
price elas...
View 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