Question 1

Table 5-3
Consider the following demand schedule. 
-Refer to Table 5-3. Using the midpoint method, demand is unit elastic when price changes from

Accepted Answer

The answer of Table 5-3
Consider the following demand schedule. 
-Refer...

Question 2

Suppose the price of a bag of frozen chicken nuggets decreases from $6.50 to $5.75 and, as a result, the quantity of bags demanded increases from 600 to 800. Using the midpoint method, the price elasticity of demand for frozen chicken nuggets in the given price range is

Accepted Answer

A)  0.35.
B)  0.43.
C)  2.33.
D)  2.89.E) A) and C)
F) C) and D)

Question 3

Figure 5-6 
-Refer to Figure 5-6. For prices above $8, demand is price

Accepted Answer

A)  elastic, and total revenue will rise as price rises.
B)  inelastic, and total revenue will rise as price rises.
C)  elastic, and total revenue will fall as price rises.
D)  inelastic, and total revenue will fall as price rises.E) None of the above
F) A) and C)

Question 4

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

Accepted Answer

A)  necessities.
B)  complements.
C)  normal goods.
D)  inferior goods.E) A) and D)
F) B) and C)

Question 5

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 6

Suppose demand is given by the equation:  Using the midpoint method, what is the price elasticity of demand between $1 and $2?

Accepted Answer

The price ...

Question 7

Scenario 5-5
Suppose the government is concerned about firms in the United States importing illegal caviar. As a result, the government increases border patrols to catch illegal shipments. U.S. Customs agents perform DNA testing on the caviar to determine if it comes from endangered species of fish. If so, the government destroys the caviar.
-Refer to Scenario 5-5. What would we expect to observe in the caviar market?

Accepted Answer

A)  Equilibrium prices and quantities will increase.
B)  Equilibrium prices will increase by more if the demand for caviar is elastic than if demand is inelastic.
C)  Total revenues to caviar firms will increase if the demand for caviar is inelastic.
D)  All of the above are correct.E) None of the above
F) B) and D)

Question 8

Supply and demand both tend to be more elastic in the long run and more inelastic in the short run.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A)  milk
B)  sailboats
C)  good X in the short run compared to good X in the long run
D)  gasolineE) A) and B)
F) None of the above

Question 10

The price elasticity of demand measures how much

Accepted Answer

A)  quantity demanded responds to a change in price.
B)  quantity demanded responds to a change in income.
C)  price responds to a change in demand.
D)  demand responds to a change in supply.E) A) and C)
F) None of the above

Question 11

Farm programs that pay farmers not to plant crops on all their land

Accepted Answer

A)  hurt farmers by lowering their total revenue and hurt consumers by causing shortages of some food items.
B)  help farmers by cutting costs, which helps consumers by lowering food prices.
C)  help farmers by increasing total revenue in the market but hurt consumers by raising food prices.
D)  help farmers directly since they receive government payments but have no real effects on consumers.E) A) and C)
F) B) and D)

Question 12

When the price of candy bars is $1.00, the quantity demanded is 500 per day. When the price falls to $0.80, the quantity demanded increases to 600. Given this information and using the midpoint method, we know that the demand for candy bars is

Accepted Answer

A)  inelastic.
B)  elastic.
C)  unit elastic.
D)  perfectly inelastic.E) None of the above
F) C) and D)

Question 13

Suppose a market has the demand function Qd=20-0.5P. At which of the following prices will total revenue be maximized?

Accepted Answer

A)  $10
B)  $20
C)  $30
D)  $40E) C) and D)
F) B) and C)

Question 14

Suppose the price of gas increases by 20%. Will demand be more elastic if consumers have 3 weeks or 3 years to adjust to this price change?

Accepted Answer

The answer of Suppose the price of gas increases by...

Question 15

Suppose an airline determines that its customers traveling for business have inelastic demand and its customers traveling for vacations have an elastic demand. If the airline's objective is to increase total revenue, it should

Accepted Answer

A)  increase the price charged to vacationers and decrease the price charged to business travelers.
B)  decrease the price charged to vacationers and increase the price charged to business travelers.
C)  decrease the price to both groups of customers.
D)  increase the price for both groups of customers.E) None of the above
F) A) and B)

Question 16

The demand for bread is likely to be more elastic than the demand for solid-gold bread plates.

Accepted Answer

A) True 
 B)False

Question 17

If two goods are substitutes, their cross-price elasticity will be

Accepted Answer

A)  positive.
B)  negative.
C)  zero.
D)  equal to the difference between the income elasticities of demand for the two goods.E) A) and B)
F) A) and C)

Question 18

Suppose there is a 6 percent increase in the price of good X and a resulting 6 percent decrease in the quantity of X demanded. Price elasticity of demand for X is

Accepted Answer

A)  0.
B)  1.
C)  6.
D)  36.E) None of the above
F) A) and C)

Question 19

The demand for grape-flavored Hubba Bubba bubble gum is likely

Accepted Answer

A)  inelastic because there are many close substitutes for grape-flavored Hubba Bubba .
B)  elastic because there are many close substitutes for grape-flavored Hubba Bubba.
C)  inelastic because the market is broadly defined.
D)  elastic because the market is broadly defined.E) All of the above
F) A) and D)

Question 20

On a certain supply curve, one point is (quantity supplied = 200, price = $4.00)  and another point is (quantity supplied = 250, price = $4.50) . Using the midpoint method, the price elasticity of supply is about

Accepted Answer

A)  0.22.
B)  0.53.
C)  1.00.
D)  1.89.E) B) and C)
F) A) and B)

Exam 5: Elasticity and Its Application

Table 5-3 Consider the following demand schedule. -Refer to Table 5-3. Using the midpoint method, demand is unit elastic when price changes from

Correct Answer
verified

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

Correct Answer
verified

The demand for grape-flavored Hubba Bubba bubble gum is likely

Correct Answer
verified

Farm programs that pay farmers not to plant crops on all their land

Correct Answer
verified

The price elasticity of demand measures how much

Correct Answer
verified

If two goods are substitutes, their cross-price elasticity will be

Correct Answer
verified

Suppose there is a 6 percent increase in the price of good X and a resulting 6 percent decrease in the quantity of X demanded. Price elasticity of demand for X is

Correct Answer
verified

Suppose the price of gas increases by 20%. Will demand be more elastic if consumers have 3 weeks or 3 years to adjust to this price change?

Correct Answer
verified

Suppose demand is given by the equation: Using the midpoint method, what is the price elasticity of demand between $1 and $2?

Correct Answer
verified
The price ...
View Answer

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

Correct Answer
verified

Supply and demand both tend to be more elastic in the long run and more inelastic in the short run.

Correct Answer
verified

Figure 5-6 -Refer to Figure 5-6. For prices above $8, demand is price

Correct Answer
verified

Suppose the price of a bag of frozen chicken nuggets decreases from $6.50 to $5.75 and, as a result, the quantity of bags demanded increases from 600 to 800. Using the midpoint method, the price elasticity of demand for frozen chicken nuggets in the given price range is

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Suppose a market has the demand function Q^d=20-0.5P. At which of the following prices will total revenue be maximized?

Correct Answer
verified

On a certain supply curve, one point is (quantity supplied = 200, price = $4.00) and another point is (quantity supplied = 250, price = $4.50) . Using the midpoint method, the price elasticity of supply is about

Correct Answer
verified

Suppose an airline determines that its customers traveling for business have inelastic demand and its customers traveling for vacations have an elastic demand. If the airline's objective is to increase total revenue, it should

Correct Answer
verified

When the price of candy bars is $1.00, the quantity demanded is 500 per day. When the price falls to $0.80, the quantity demanded increases to 600. Given this information and using the midpoint method, we know that the demand for candy bars is

Correct Answer
verified

The demand for bread is likely to be more elastic than the demand for solid-gold bread plates.

Correct Answer
verified

Exam 5: Elasticity and Its Application

Table 5-3 Consider the following demand schedule. -Refer to Table 5-3. Using the midpoint method, demand is unit elastic when price changes from

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The demand for grape-flavored Hubba Bubba bubble gum is likely

Correct AnswerverifiedShow Answer

Farm programs that pay farmers not to plant crops on all their land

Correct AnswerverifiedShow Answer

The price elasticity of demand measures how much

Correct AnswerverifiedShow Answer

If two goods are substitutes, their cross-price elasticity will be

Correct AnswerverifiedShow Answer

Suppose there is a 6 percent increase in the price of good X and a resulting 6 percent decrease in the quantity of X demanded. Price elasticity of demand for X is

Correct AnswerverifiedShow Answer

Suppose the price of gas increases by 20%. Will demand be more elastic if consumers have 3 weeks or 3 years to adjust to this price change?

Correct AnswerverifiedShow Answer

Suppose demand is given by the equation: Using the midpoint method, what is the price elasticity of demand between $1 and $2?

Correct AnswerverifiedThe price ...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Supply and demand both tend to be more elastic in the long run and more inelastic in the short run.

Correct AnswerverifiedShow Answer

Figure 5-6 -Refer to Figure 5-6. For prices above $8, demand is price

Correct AnswerverifiedShow Answer

Suppose the price of a bag of frozen chicken nuggets decreases from $6.50 to $5.75 and, as a result, the quantity of bags demanded increases from 600 to 800. Using the midpoint method, the price elasticity of demand for frozen chicken nuggets in the given price range is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose a market has the demand function Qd=20-0.5P. At which of the following prices will total revenue be maximized?

Correct AnswerverifiedShow Answer

On a certain supply curve, one point is (quantity supplied = 200, price = $4.00) and another point is (quantity supplied = 250, price = $4.50) . Using the midpoint method, the price elasticity of supply is about

Correct AnswerverifiedShow Answer

Suppose an airline determines that its customers traveling for business have inelastic demand and its customers traveling for vacations have an elastic demand. If the airline's objective is to increase total revenue, it should

Correct AnswerverifiedShow Answer

When the price of candy bars is $1.00, the quantity demanded is 500 per day. When the price falls to $0.80, the quantity demanded increases to 600. Given this information and using the midpoint method, we know that the demand for candy bars is

Correct AnswerverifiedShow Answer

The demand for bread is likely to be more elastic than the demand for solid-gold bread plates.

Correct AnswerverifiedShow Answer

Correct Answer
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The price ...
View Answer

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Correct Answer
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Suppose a market has the demand function Q^d=20-0.5P. At which of the following prices will total revenue be maximized?

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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