Question 1

Figure 5-10 1 is represented by the area(s)  A) B + D. B) A + B. C) C + D. D) D." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 5-10.Total revenue when the price is P1 is represented by the area(s)

Accepted Answer

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

Question 2

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

Accepted Answer

A)  0.5 percent decrease in the quantity demanded.
B)  2 percent decrease in the quantity demanded.
C)  5 percent decrease in the quantity demanded.
D)  50 percent decrease in the quantity demanded.E) A) and D)
F) B) and C)

Question 3

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

Accepted Answer

A)  peanut butter and jelly
B)  automobile tires and coffee
C)  pens and pencils
D)  paperback novels and electronic books for e-readersE) A) and B)
F) A) and C)

Question 4

Marcus says that he would smoke one pack of cigarettes each day regardless of the price.If he is telling the truth,Marcus's

Accepted Answer

A)  demand for cigarettes is perfectly inelastic.
B)  price elasticity of demand for cigarettes is infinite.
C)  income elasticity of demand for cigarettes is 0.
D)  More than one of the above is correct.E) C) and D)
F) None of the above

Question 5

Figure 5-10 1 and P2. B) a decrease in price from P2 to P1 will cause an increase in total revenue. C) the magnitude of the percent change in price between P1 and P2 is smaller than the magnitude of the corresponding percent change in quantity demanded. D) All of the above are correct." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 5-10.If rectangle D is larger than rectangle A,then

Accepted Answer

A)  demand is elastic between prices P1 and P2.
B)  a decrease in price from P2 to P1 will cause an increase in total revenue.
C)  the magnitude of the percent change in price between P1 and P2 is smaller than the magnitude of the corresponding percent change in quantity demanded.
D)  All of the above are correct.E) All of the above
F) B) and C)

Question 6

If a change in the price of a good results in no change in total revenue,then

Accepted Answer

A)  the demand for the good must be elastic.
B)  the demand for the good must be inelastic.
C)  the demand for the good must be unit elastic.
D)  buyers must not respond very much to a change in price.E) All of the above
F) None of the above

Question 7

When the price of a good is $5,the quantity demanded is 120 units per month;when the price is $7,the quantity demanded is 100 units per month.Using the midpoint method,the price elasticity of demand is about

Accepted Answer

A)  0.55.
B)  1.83.
C)  2.
D)  10.E) A) and B)
F) A) and D)

Question 8

If the demand for bananas is elastic,then an increase in the price of bananas will

Accepted Answer

A)  increase total revenue of banana sellers.
B)  decrease total revenue of banana sellers.
C)  not change total revenue of banana sellers.
D)  There is not enough information to answer this question.E) A) and B)
F) All of the above

Question 9

Figure 5-12 
-Refer to Figure 5-12.Sellers' total revenue would increase if the price

Accepted Answer

A)  increased from $6 to $9.
B)  increased from $33 to $36.
C)  decreased from $15 to $12.
D)  All of the above are correct.E) C) and D)
F) B) and C)

Question 10

Which of the following expressions represents a cross-price elasticity of demand?

Accepted Answer

A)  percentage change in quantity demanded of bread divided by percentage change in quantity supplied of bread
B)  percentage change in quantity demanded of bread divided by percentage change in price of butter
C)  percentage change in price of bread divided by percentage change in quantity demanded of bread
D)  percentage change in quantity demanded of bread divided by percentage change in incomeE) C) and D)
F) A) and B)

Question 11

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

Question 12

The midpoint method for calculating elasticities is convenient in that it allows us to

Accepted Answer

A)  ignore the percentage change in quantity demanded and instead focus entirely on the percentage change in price.
B)  calculate the same value for the elasticity,regardless of whether the price increases or decreases.
C)  assume that sellers' total revenue stays constant when the price changes.
D)  restrict all elasticity values to between 0 and 1.E) C) and D)
F) B) and C)

Question 13

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

Accepted Answer

A)  athletic shoes
B)  running shoes
C)  Nike running shoes
D)  Nike Shox running shoesE) B) and C)
F) A) and B)

Question 14

Suppose that when the price of ginger ale is $2 per bottle,firms can sell 4 million bottles.When the price of ginger ale is $3 per bottle,firms can sell 2 million bottles.Which of the following statements is true?

Accepted Answer

A)  The demand for ginger ale is income inelastic,so an increase in the price of ginger ale will increase the total revenue of ginger ale producers.
B)  The demand for ginger ale is income elastic,so an increase in the price of ginger ale will increase the total revenue of ginger ale producers.
C)  The demand for ginger ale is price inelastic,so an increase in the price of ginger ale will increase the total revenue of ginger ale producers.
D)  The demand for ginger ale is price elastic,so an increase in the price of ginger ale will decrease the total revenue of ginger ale producers.E) All of the above
F) C) and D)

Question 15

If the price elasticity of demand for a good is 2,then a 10 percent decrease in the quantity demanded must be the result of

Accepted Answer

A)  a 0.2 percent increase in the price.
B)  a 2.5 percent increase in the price.
C)  a 5 percent increase in the price.
D)  a 20 percent increase in the price.E) All of the above
F) B) and D)

Question 16

Using the midpoint method,the price elasticity of demand for a good is computed to be approximately 2.Which of the following events is consistent with a 0.1 percent increase in the price of the good?

Accepted Answer

A)  The quantity of the good demanded decreases from 250 to 150.
B)  The quantity of the good demanded decreases from 200 to 100.
C)  The quantity of the good demanded decreases by 0.05 percent.
D)  The quantity of the good demanded decreases by 0.2 percent.E) A) and B)
F) A) and C)

Question 17

Figure 5-8 
-Refer to Figure 5-8.When the price is $15,total revenue is

Accepted Answer

A)  $1,500.
B)  $2,500.
C)  $3,500.
D)  $4,500.E) A) and D)
F) None of the above

Question 18

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

Question 19

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

Question 20

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) A) and D)
F) All of the above

Exam 5: Elasticity and Its Applications: The Elasticity of Demand

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

Correct AnswerverifiedShow Answer

Figure 5-10 -Refer to Figure 5-10.Total revenue when the price is P1 is represented by the area(s)

Correct AnswerverifiedShow Answer

If the price elasticity of demand for a good is 2,then a 10 percent decrease in the quantity demanded must be the result of

Correct AnswerverifiedShow Answer

Suppose that when the price of ginger ale is $2 per bottle,firms can sell 4 million bottles.When the price of ginger ale is $3 per bottle,firms can sell 2 million bottles.Which of the following statements is true?

Correct AnswerverifiedShow Answer

If a change in the price of a good results in no change in total revenue,then

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the demand for bananas is elastic,then an increase in the price of bananas will

Correct AnswerverifiedShow Answer

Using the midpoint method,the price elasticity of demand for a good is computed to be approximately 2.Which of the following events is consistent with a 0.1 percent increase in the price of the good?

Correct AnswerverifiedShow Answer

A perfectly elastic demand implies that

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The midpoint method for calculating elasticities is convenient in that it allows us to

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

Figure 5-8 -Refer to Figure 5-8.When the price is $15,total revenue is

Correct AnswerverifiedShow Answer

When the price of a good is $5,the quantity demanded is 120 units per month;when the price is $7,the quantity demanded is 100 units per month.Using the midpoint method,the price elasticity of demand is about

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

Figure 5-12 -Refer to Figure 5-12.Sellers' total revenue would increase if the price

Correct AnswerverifiedShow Answer

Figure 5-10 -Refer to Figure 5-10.If rectangle D is larger than rectangle A,then

Correct AnswerverifiedShow Answer

Marcus says that he would smoke one pack of cigarettes each day regardless of the price.If he is telling the truth,Marcus's

Correct AnswerverifiedShow Answer

Which of the following expressions represents a cross-price elasticity of demand?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Figure 5-10 -Refer to Figure 5-10.Total revenue when the price is P₁ is represented by the area(s)

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