Question 1

The demand for luxury suites at basketball games is more elastic if

Accepted Answer

A)   these suites are a necessity.
B)   these suites are a luxury item.
C)   few close substitutes exist for these suites.
D)   basketball fans have little time to look for alternative suites.
E)   poorer fans cannot afford luxury suites.F) D) and E)
G) B) and D)

Question 2

When we use the midpoint method to compute the price elasticity of demand we use

Accepted Answer

A)   the original quantity and the average price.
B)   the original price and the average quantity.
C)   the average price and the average quantity.
D)   either the original or new price, and the average quantity.
E)   the average price and the original quantity.F) A) and D)
G) A) and E)

Question 3

If wheat can be produced at a constant opportunity cost,then the supply of wheat is

Accepted Answer

A)   elastic.
B)   inelastic.
C)   unit elastic.
D)   perfectly inelastic.
E)   perfectly elastic.F) A) and C)
G) B) and E)

Question 4

Suppose the price of a box of cereal rises from $4 to $6.Using the midpoint method,what is the percentage change in price?

Accepted Answer

A)   50 percent
B)   40 percent
C)   33 percent
D)   67 percent
E)   None of the above answers is correct.F) A) and B)
G) A) and C)

Question 5

The cross elasticity of demand for blank DVDs and DVD burners is likely to be

Accepted Answer

A)   positive because they are substitutes.
B)   positive because they are complements.
C)   negative because they are substitutes.
D)   negative because they are complements.
E)   negative because with the advent of digital cameras, film and film cameras are inferior goods.F) C) and D)
G) B) and D)

Question 6

-In the figure above,when the price falls from $8 to $7,total revenue

Accepted Answer

A)   increases from $120 to $210 so demand is elastic.
B)   decreases from $210 to $120 so demand is inelastic.
C)   increases from $120 to $210 so demand is inelastic.
D)   decreases from $210 to $120 so demand is elastic.
E)   increases from $120 to $210, but more information is needed to determine whether demand is elastic, inelastic, or unit elastic.F) D) and E)
G) B) and D)

Question 7

KFC raises the price of its grilled chicken.The price elasticity of demand for KFC grilled chicken is 0.8.What happens to the KFC's total revenue?

Accepted Answer

A)   nothing
B)   It increases.
C)   It decreases.
D)   It becomes negative.
E)   It might change, but more information is needed to determine if it increases, decreases, or does not change.F) C) and D)
G) None of the above

Question 8

The price elasticity of demand for an agricultural product is 0.4.This value means that,when the quantity decreases 1 percent,the price

Accepted Answer

A)   falls 4 percent.
B)   rises 4 percent.
C)   falls 2.5 percent.
D)   rises 2.5 percent.
E)   rises 0.25 percent.F) B) and C)
G) A) and E)

Question 9

-In the figure above,using the midpoint method,the price elasticity of demand when the price falls from $7 to $6 is equal to

Accepted Answer

A)   2.50.
B)   1.63.
C)   0.40.
D)   0.62.
E)   1.00.F) B) and C)
G) C) and D)

Question 10

If a 10 percent price increase generates a 20 percent decrease in quantity demanded,then demand is

Accepted Answer

A)   elastic.
B)   perfectly inelastic.
C)   perfectly elastic.
D)   inelastic.
E)   unit elastic.F) B) and E)
G) B) and C)

Question 11

A ________ curve means that ________.

Accepted Answer

A)   horizontal demand; a change in price does not change total revenue
B)   horizontal demand; the elasticity of demand is less than 1
C)   horizontal supply; the elasticity of supply is infinite
D)   horizontal supply; the elasticity of demand is infinite
E)   vertical demand; a change in price does not change total revenueF) B) and D)
G) B) and C)

Question 12

-The figure above shows the supply curve for a good with

Accepted Answer

A)   a perfectly elastic supply.
B)   a perfectly inelastic supply.
C)   an elastic supply.
D)   an inelastic supply.
E)   a unit elastic supply.F) C) and E)
G) B) and C)

Question 13

In the figure above,at the point where the price is $4 per cup the price elasticity of demand is

Accepted Answer

A)   2.
B)   0.5.
C)   1.
D)   1.5.
E)   0.F) C) and D)
G) All of the above

Question 14

When the price of Cosmopolitan magazine decreases from $5 to $3,the quantity demanded increases from 600,000 to 1,000,000 copies each month.Using the midpoint method,the price elasticity of demand equals

Accepted Answer

A)   1.
B)   3.
C)   2.
D)   1/3.
E)   1/2.F) D) and E)
G) C) and D)

Question 15

People take fewer trips by airplane when their incomes fall because of a recession.Trips by airplane must be

Accepted Answer

A)   a normal good.
B)   an inferior good.
C)   a substitute for other goods.
D)   a complement to other goods.
E)   an inelastic good.F) B) and D)
G) B) and C) A

Question 16

The price of coffee rose 40 percent and the quantity of coffee demanded fell by 20 percent.The quantity of doughnuts demanded also fell by 20 percent.From this information,we can conclude that

Accepted Answer

A)   the demand for coffee is elastic.
B)   the demand for coffee is unit elastic.
C)   coffee is an inferior good.
D)   the cross elasticity demand between coffee and doughnuts is -0.5.
E)   the income elasticity of demand for coffee is 2.F) A) and B)
G) None of the above

Question 17

-Using the table above,what is the elasticity of demand between the prices of $9 and $7?

Accepted Answer

A)   1/4
B)   1
C)   2
D)   4
E)   6F) B) and D)
G) None of the above

Question 18

Suppose the price of a movie falls from $9 to $7.Using the midpoint method,what is the percentage change in price?

Accepted Answer

A)   33 percent
B)   -33 percent
C)   25 percent
D)   -25 percent
E)   -97 percentF) A) and E)
G) All of the above D

Question 19

If the price of suntan lotion increases from $6 to $8 per bottle and quantity demanded decreases from 900,000 bottles to 845,000 bottles,using the midpoint method,what is the price elasticity of demand for suntan lotion?

Accepted Answer

The price elasticity of demand = (percen...

Question 20

If the price of a good rises,then moving along a demand curve the percentage change in the quantity demanded will be

Accepted Answer

A)   positive.
B)   negative.
C)   zero.
D)   either positive, negative, or zero depending on how the demand curve shifted.
E)   undefined.F) A) and E)
G) D) and E) B

Exam 5: Elasticities of Demand and Supply

The demand for luxury suites at basketball games is more elastic if

Correct AnswerverifiedShow Answer

When we use the midpoint method to compute the price elasticity of demand we use

Correct AnswerverifiedShow Answer

If wheat can be produced at a constant opportunity cost,then the supply of wheat is

Correct AnswerverifiedShow Answer

Suppose the price of a box of cereal rises from $4 to $6.Using the midpoint method,what is the percentage change in price?

Correct AnswerverifiedShow Answer

The cross elasticity of demand for blank DVDs and DVD burners is likely to be

Correct AnswerverifiedShow Answer

-In the figure above,when the price falls from $8 to $7,total revenue

Correct AnswerverifiedShow Answer

KFC raises the price of its grilled chicken.The price elasticity of demand for KFC grilled chicken is 0.8.What happens to the KFC's total revenue?

Correct AnswerverifiedShow Answer

The price elasticity of demand for an agricultural product is 0.4.This value means that,when the quantity decreases 1 percent,the price

Correct AnswerverifiedShow Answer

-In the figure above,using the midpoint method,the price elasticity of demand when the price falls from $7 to $6 is equal to

Correct AnswerverifiedShow Answer

If a 10 percent price increase generates a 20 percent decrease in quantity demanded,then demand is

Correct AnswerverifiedShow Answer

A ________ curve means that ________.

Correct AnswerverifiedShow Answer

-The figure above shows the supply curve for a good with

Correct AnswerverifiedShow Answer

In the figure above,at the point where the price is $4 per cup the price elasticity of demand is

Correct AnswerverifiedShow Answer

When the price of Cosmopolitan magazine decreases from $5 to $3,the quantity demanded increases from 600,000 to 1,000,000 copies each month.Using the midpoint method,the price elasticity of demand equals

Correct AnswerverifiedShow Answer

People take fewer trips by airplane when their incomes fall because of a recession.Trips by airplane must be

Correct AnswerverifiedA

The price of coffee rose 40 percent and the quantity of coffee demanded fell by 20 percent.The quantity of doughnuts demanded also fell by 20 percent.From this information,we can conclude that

Correct AnswerverifiedShow Answer

-Using the table above,what is the elasticity of demand between the prices of $9 and $7?

Correct AnswerverifiedShow Answer

Suppose the price of a movie falls from $9 to $7.Using the midpoint method,what is the percentage change in price?

Correct AnswerverifiedD

If the price of suntan lotion increases from $6 to $8 per bottle and quantity demanded decreases from 900,000 bottles to 845,000 bottles,using the midpoint method,what is the price elasticity of demand for suntan lotion?

Correct AnswerverifiedThe price elasticity of demand = (percen...View AnswerShow Answer

If the price of a good rises,then moving along a demand curve the percentage change in the quantity demanded will be

Correct AnswerverifiedB

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A curve means that .

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A

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D

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The price elasticity of demand = (percen...
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B