Question 1

Using the midpoint method, compute the elasticity of demand between points A and B. Is demand along this portion of the curve elastic or inelastic? Interpret your answer with regard to price and quantity demanded. Now compute the elasticity of demand between points B and C. Is demand along this portion of the curve elastic or inelastic?

Accepted Answer

In the section of the demand curve from ...

Question 2

The smaller the price elasticity of demand, the

Accepted Answer

A)  more likely the product is a luxury.
B)  smaller the responsiveness of quantity demanded to a change in price.
C)  more substitutes the product has.
D)  greater the responsiveness of quantity demanded to a change in price.E) None of the above
F) A) and D)

Question 3

Figure 5-11 
-Refer to Figure 5-11. If price increases from $10 to $20, total revenue will

Accepted Answer

A)  increase by $120, so demand must be inelastic in this price range.
B)  increase by $320, so demand must be inelastic in this price range.
C)  decrease by $120, so demand must be elastic in this price range.
D)  decrease by $320, so demand must be elastic in this price range.E) A) and B)
F) C) and D)

Question 4

The price elasticity of supply measures how responsive

Accepted Answer

A)  sellers are to a change in price.
B)  sellers are to a change in buyers' income.
C)  buyers are to a change in production costs.
D)  equilibrium price is to a change in supply.E) A) and C)
F) B) and D)

Question 5

When demand is perfectly inelastic, the demand curve will be

Accepted Answer

A)  negatively sloped, because buyers decrease their purchases when the price rises.
B)  vertical, because buyers purchase the same amount as before whenever the price rises or falls.
C)  positively sloped, because buyers increase their purchases when price rises.
D)  positively sloped, because buyers increase their total expenditures when price rises.E) B) and D)
F) None of the above

Question 6

You are in charge of the local city-owned aquatic center. You need to increase the revenue generated by the aquatic center to meet expenses. The mayor advises you to increase the price of a day pass. The city manager recommends reducing the price of a day pass. You realize that

Accepted Answer

A)  the mayor thinks demand is elastic, and the city manager thinks demand is inelastic.
B)  both the mayor and the city manager think that demand is elastic.
C)  both the mayor and the city manager think that demand is inelastic.
D)  the mayor thinks demand is inelastic, and the city manager thinks demand is elastic.E) None of the above
F) All of the above

Question 7

Heath's income elasticity of demand for concerts is 2. All else equal, this means that if his income increases by 10 percent, he will purchase tickets for

Accepted Answer

A)  2 percent more concerts.
B)  5 percent more concerts.
C)  10 percent more concerts.
D)  20 percent more concerts.E) None of the above
F) All of the above

Question 8

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

Accepted Answer

A)  mint-flavored toothpaste
B)  toothpaste
C)  Colgate mint-flavored toothpaste
D)  a generic mint-flavored toothpasteE) C) and D)
F) All of the above

Question 9

Recently, in Smalltown, the price of Twinkies fell from $0.80 to $0.70. As a result, the quantity demanded of Ho-Ho's decreased from 120 to 100. What would be the appropriate elasticity to compute? Using the midpoint method, compute this elasticity. What does your answer tell you?

Accepted Answer

The appropriate elasticity to compute wo...

Question 10

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

Question 11

Supply is said to be inelastic if the quantity supplied responds substantially to changes in the price and elastic if the quantity supplied responds only slightly to price.

Accepted Answer

A) True 
 B)False

Question 12

Demand is said to have unit elasticity if the price elasticity of demand is

Accepted Answer

A)  less than 1.
B)  greater than 1.
C)  equal to 1.
D)  equal to 0.E) A) and D)
F) B) and C)

Question 13

Cross-price elasticity of demand measures how the quantity demanded of one good changes as the price of another good changes.

Accepted Answer

A) True 
 B)False

Question 14

For which of the following goods would demand be most price elastic: a car, a sedan, a Honda sedan, a Honda Accord, a black Honda Accord?

Accepted Answer

a black Ho...

Question 15

When small changes in price lead to infinite changes in quantity demanded, demand is perfectly

Accepted Answer

A)  elastic, and the demand curve will be horizontal.
B)  inelastic, and the demand curve will be horizontal.
C)  elastic, and the demand curve will be vertical.
D)  inelastic, and the demand curve will be vertical.E) B) and C)
F) A) and B)

Question 16

When demand is inelastic, an increase 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) None of the above
F) A) and C)

Question 17

Suppose that good X is a luxury and that good Y is a necessity. Which good would you expect to have more price inelastic demand?

Accepted Answer

The answer of Suppose that good X is a luxury...

Question 18

If the price elasticity of supply is 1.5, and a price increase led to a 1.8% increase in quantity supplied, then the price increase is about

Accepted Answer

A)  0.67%.
B)  0.83%.
C)  1.20%.
D)  2.70%.E) A) and B)
F) A) and C)

Question 19

Which of the following expressions is valid for the price elasticity of demand?

Accepted Answer

A)  Price elasticity of demand =  .
B)  Price elasticity of demand =  .
C)  Price elasticity of demand =  .
D)  Price elasticity of demand =  .E) A) and B)
F) A) and C)

Question 20

Scenario 5-2
Suppose the demand function for good X is given by:  where  is the quantity demanded of good X,  is the price of good X, and  is the price of good Y, which is related to good X.
-Refer to Scenario 5-2. Good X and Good Y are related as

Accepted Answer

The answer of Scenario 5-2
Suppose the demand function for good...

Exam 5: Elasticity and Its Application

You are in charge of the local city-owned aquatic center. You need to increase the revenue generated by the aquatic center to meet expenses. The mayor advises you to increase the price of a day pass. The city manager recommends reducing the price of a day pass. You realize that

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Recently, in Smalltown, the price of Twinkies fell from $0.80 to $0.70. As a result, the quantity demanded of Ho-Ho's decreased from 120 to 100. What would be the appropriate elasticity to compute? Using the midpoint method, compute this elasticity. What does your answer tell you?

Correct Answer
verified
The appropriate elasticity to compute wo...
View Answer

When demand is perfectly inelastic, the demand curve will be

Correct Answer
verified

If the price elasticity of supply is 1.5, and a price increase led to a 1.8% increase in quantity supplied, then the price increase is about

Correct Answer
verified

Suppose that good X is a luxury and that good Y is a necessity. Which good would you expect to have more price inelastic demand?

Correct Answer
verified

Supply is said to be inelastic if the quantity supplied responds substantially to changes in the price and elastic if the quantity supplied responds only slightly to price.

Correct Answer
verified

The smaller the price elasticity of demand, the

Correct Answer
verified

Which of the following expressions is valid for the price elasticity of demand?

Correct Answer
verified

Figure 5-11 -Refer to Figure 5-11. If price increases from $10 to $20, total revenue will

Correct Answer
verified

Demand is said to have unit elasticity if the price elasticity of demand is

Correct Answer
verified

Scenario 5-2 Suppose the demand function for good X is given by: where is the quantity demanded of good X, is the price of good X, and is the price of good Y, which is related to good X. -Refer to Scenario 5-2. Good X and Good Y are related as

Correct Answer
verified

The price elasticity of supply measures how responsive

Correct Answer
verified

Cross-price elasticity of demand measures how the quantity demanded of one good changes as the price of another good changes.

Correct Answer
verified

For which of the following goods would demand be most price elastic: a car, a sedan, a Honda sedan, a Honda Accord, a black Honda Accord?

Correct Answer
verified
a black Ho...
View Answer

Correct Answer
verified
In the section of the demand curve from ...
View Answer

When small changes in price lead to infinite changes in quantity demanded, demand is perfectly

Correct Answer
verified

Heath's income elasticity of demand for concerts is 2. All else equal, this means that if his income increases by 10 percent, he will purchase tickets for

Correct Answer
verified

When demand is inelastic, an increase in price will cause

Correct Answer
verified

Exam 5: Elasticity and Its Application

You are in charge of the local city-owned aquatic center. You need to increase the revenue generated by the aquatic center to meet expenses. The mayor advises you to increase the price of a day pass. The city manager recommends reducing the price of a day pass. You realize 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

Recently, in Smalltown, the price of Twinkies fell from $0.80 to $0.70. As a result, the quantity demanded of Ho-Ho's decreased from 120 to 100. What would be the appropriate elasticity to compute? Using the midpoint method, compute this elasticity. What does your answer tell you?

Correct AnswerverifiedThe appropriate elasticity to compute wo...View AnswerShow Answer

When demand is perfectly inelastic, the demand curve will be

Correct AnswerverifiedShow Answer

If the price elasticity of supply is 1.5, and a price increase led to a 1.8% increase in quantity supplied, then the price increase is about

Correct AnswerverifiedShow Answer

Suppose that good X is a luxury and that good Y is a necessity. Which good would you expect to have more price inelastic demand?

Correct AnswerverifiedShow Answer

Supply is said to be inelastic if the quantity supplied responds substantially to changes in the price and elastic if the quantity supplied responds only slightly to price.

Correct AnswerverifiedShow Answer

The smaller the price elasticity of demand, the

Correct AnswerverifiedShow Answer

Which of the following expressions is valid for the price elasticity of demand?

Correct AnswerverifiedShow Answer

Figure 5-11 -Refer to Figure 5-11. If price increases from $10 to $20, total revenue will

Correct AnswerverifiedShow Answer

Demand is said to have unit elasticity if the price elasticity of demand is

Correct AnswerverifiedShow Answer

Scenario 5-2 Suppose the demand function for good X is given by: where is the quantity demanded of good X, is the price of good X, and is the price of good Y, which is related to good X. -Refer to Scenario 5-2. Good X and Good Y are related as

Correct AnswerverifiedShow Answer

The price elasticity of supply measures how responsive

Correct AnswerverifiedShow Answer

Cross-price elasticity of demand measures how the quantity demanded of one good changes as the price of another good changes.

Correct AnswerverifiedShow Answer

For which of the following goods would demand be most price elastic: a car, a sedan, a Honda sedan, a Honda Accord, a black Honda Accord?

Correct Answerverifieda black Ho...View AnswerShow Answer

Correct AnswerverifiedIn the section of the demand curve from ...View AnswerShow Answer

When small changes in price lead to infinite changes in quantity demanded, demand is perfectly

Correct AnswerverifiedShow Answer

Heath's income elasticity of demand for concerts is 2. All else equal, this means that if his income increases by 10 percent, he will purchase tickets for

Correct AnswerverifiedShow Answer

When demand is inelastic, an increase in price will cause

Correct AnswerverifiedShow Answer

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verified
The appropriate elasticity to compute wo...
View Answer

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a black Ho...
View Answer

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In the section of the demand curve from ...
View Answer

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Correct Answer
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Correct Answer
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