Question 1

Cross-price elasticity of demand measures how

Accepted Answer

A)   the price of one good changes in response to a change in the price of another good.
B)   the quantity demanded of one good changes in response to a change in the quantity demanded of another good.
C)   the quantity demanded of one good changes in response to a change in the price of another good.
D)   strongly normal or inferior a good is.E) C) and D)
F) B) and C)

Question 2

Food and clothing tend to have

Accepted Answer

A)   small income elasticities because consumers, regardless of their incomes, choose to buy relatively constant quantities of these goods.
B)   small income elasticities because consumers buy proportionately more of both goods at higher income levels than they buy at low income levels.
C)   large income elasticities because they are necessities.
D)   large income elasticities because they are relatively inexpensive.E) C) and D)
F) A) and B)

Question 3

If a 20% change in price results in a 15% change in quantity supplied, then the price elasticity of supply is about

Accepted Answer

A)   1.33, and supply is elastic.
B)   1.33, and supply is inelastic.
C)   0.75, and supply is elastic.
D)   0.75, and supply is inelastic.E) A) and B)
F) All of the above

Question 4

When demand is elastic, a decrease in price will cause

Accepted Answer

A)   an increase in total revenue.
B)   a decrease in total revenue.
C)   no change in total revenue but an increase in quantity demanded.
D)   no change in total revenue but a decrease in quantity demanded.E) A) and C)
F) B) and D)

Question 5

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

Question 6

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) B) and D)
F) None of the above

Question 7

Figure 5-19 
-Refer to Figure 5-19. Which of the following statements is correct?

Accepted Answer

A)   Supply curve A is perfectly elastic.
B)   Supply curve B is perfectly inelastic.
C)   Supply curve C is more inelastic than supply curve D.
D)   Supply curve D is unit elastic.E) A) and B)
F) A) and C)

Question 8

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) None of the above
F) A) and B)

Question 9

Tyler purchases 5 pounds of hot dogs per month when his monthly income is $2,000 and 4 pounds of hot dogs per month when his monthly income is $2,200. Tyler's income elasticity of demand for hot dogs is

Accepted Answer

A)   2.33, and hot dogs are a normal good.
B)   -2.33, and hot dogs are an inferior good.
C)   0.43, and hot dogs are a normal good.
D)   -0.43, and hot dogs are an inferior good.E) B) and C)
F) A) and C)

Question 10

If the price elasticity of demand for a good is 0.3, then a 20 percent decrease in price results in a

Accepted Answer

A)   0.015 percent increase in the quantity demanded.
B)   0.6 percent increase in the quantity demanded.
C)   6 percent increase in the quantity demanded.
D)   66 percent increase in the quantity demanded.E) A) and B)
F) B) and C)

Question 11

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) All of the above
F) B) and C)

Question 12

Figure 5-14 
-Refer to Figure 5-14. Over which range is the supply curve in this figure the most elastic?

Accepted Answer

A)   $16 to $40
B)   $40 to $100
C)   $100 to $220
D)   $220 to $430E) None of the above
F) All of the above

Question 13

Suppose that quantity demand rises by 10% as a result of a 15% decrease in price. The price elasticity of demand for this good is

Accepted Answer

A)   inelastic and equal to 0.67.
B)   elastic and equal to 0.67.
C)   inelastic and equal to 1.50.
D)   elastic and equal to 1.50.E) C) and D)
F) A) and B)

Question 14

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) None of the above

Question 15

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) None of the above
F) B) and C)

Question 16

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

Question 17

Figure 5-19 
-Refer to Figure 5-19. Which of the following statements is not correct?

Accepted Answer

A)   Supply curve A is perfectly inelastic.
B)   Supply curve B is perfectly elastic.
C)   Supply curve C is unit elastic.
D)   Supply curve D is more elastic than supply curve C.E) All of the above
F) B) and C)

Question 18

Suppose the price elasticity of demand for a product is 1.3. If a supplier wants to increase revenue, what change should it make to price, if any?

Accepted Answer

The answer of Suppose the price elasticity of demand for...

Exam 5: Elasticity and Its Application

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

Correct Answer
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Tyler purchases 5 pounds of hot dogs per month when his monthly income is $2,000 and 4 pounds of hot dogs per month when his monthly income is $2,200. Tyler's income elasticity of demand for hot dogs is

Correct Answer
verified

Suppose the price elasticity of demand for a product is 1.3. If a supplier wants to increase revenue, what change should it make to price, if any?

Correct Answer
verified

Figure 5-19 -Refer to Figure 5-19. Which of the following statements is correct?

Correct Answer
verified

Figure 5-19 -Refer to Figure 5-19. Which of the following statements is not correct?

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

Correct Answer
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Cross-price elasticity of demand measures how

Correct Answer
verified

Suppose that quantity demand rises by 10% as a result of a 15% decrease in price. The price elasticity of demand for this good is

Correct Answer
verified

If the price elasticity of demand for a good is 0.3, then a 20 percent decrease in price results in a

Correct Answer
verified

When demand is elastic, a decrease in price will cause

Correct Answer
verified

Figure 5-14 -Refer to Figure 5-14. Over which range is the supply curve in this figure the most elastic?

Correct Answer
verified

As price elasticity of supply increases, the supply curve

Correct Answer
verified

A perfectly elastic demand implies that

Correct Answer
verified

Food and clothing tend to have

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

If a 20% change in price results in a 15% change in quantity supplied, then the price elasticity of supply is about

Correct Answer
verified

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

Correct Answer
verified

Exam 5: Elasticity and Its Application

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

Tyler purchases 5 pounds of hot dogs per month when his monthly income is $2,000 and 4 pounds of hot dogs per month when his monthly income is $2,200. Tyler's income elasticity of demand for hot dogs is

Correct AnswerverifiedShow Answer

Suppose the price elasticity of demand for a product is 1.3. If a supplier wants to increase revenue, what change should it make to price, if any?

Correct AnswerverifiedShow Answer

Figure 5-19 -Refer to Figure 5-19. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Figure 5-19 -Refer to Figure 5-19. Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Cross-price elasticity of demand measures how

Correct AnswerverifiedShow Answer

Suppose that quantity demand rises by 10% as a result of a 15% decrease in price. The price elasticity of demand for this good is

Correct AnswerverifiedShow Answer

If the price elasticity of demand for a good is 0.3, then a 20 percent decrease in price results in a

Correct AnswerverifiedShow Answer

When demand is elastic, a decrease in price will cause

Correct AnswerverifiedShow Answer

Figure 5-14 -Refer to Figure 5-14. Over which range is the supply curve in this figure the most elastic?

Correct AnswerverifiedShow Answer

As price elasticity of supply increases, the supply curve

Correct AnswerverifiedShow Answer

A perfectly elastic demand implies that

Correct AnswerverifiedShow Answer

Food and clothing tend to have

Correct AnswerverifiedShow Answer

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

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

If a 20% change in price results in a 15% change in quantity supplied, then the price elasticity of supply is about

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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