Question 1

Figure 5-13 
-Refer to Figure 5-13. 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) C) and D)
F) B) and C)

Question 2

The production of methamphetamine (meth)  is a social problem in the Midwest. Iowa is considering two potential programs: Operation Methbust would increase the number of sheriffs' deputies to search out and destroy methamphetamine labs. Operation Say No to Meth would increase the training required of public school teachers so that they could better educate students about the health risks of using meth. Assuming that each program were successful, which of the following statements is correct?

Accepted Answer

A)  Both Operation Methbust and Say No would reduce the demand for meth.
B)  Both Operation Methbust and Say No would reduce the supply of meth.
C)  Operation Methbust would reduce the demand for meth; Operation Say No would reduce the supply of meth.
D)  Operation Methbust would reduce the supply of meth; Operation Say No would reduce the demand for meth.E) B) and C)
F) A) and B)

Question 3

Knowing that the demand for wheat is inelastic, if all farmers voluntarily did not plant wheat on 10 percent of their land, then

Accepted Answer

A)  consumers of wheat would buy more wheat.
B)  wheat farmers would suffer a reduction in their total revenue.
C)  wheat farmers would experience an increase in their total revenue.
D)  the demand for wheat would decrease.E) B) and C)
F) All of the above

Question 4

For a particular good, a 5 percent increase in price causes a 15 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Accepted Answer

A)  There are many substitutes for this good.
B)  The good is a necessity.
C)  The market for the good is broadly defined.
D)  The relevant time horizon is short.E) None of the above
F) All of the above

Question 5

Which of the following could be the price elasticity of demand for a good for which an increase in price would decrease revenue?

Accepted Answer

A)  0
B)  0.5
C)  1
D)  1.5E) A) and C)
F) A) and D)

Question 6

A government program that reduces land under cultivation hurts farmers but helps consumers.

Accepted Answer

A) True 
 B)False

Question 7

Last year, Joan bought 50 pounds of hamburger when her household's income was $40,000. This year, her household income was only $30,000 and Joan bought 60 pounds of hamburger. All else constant, Joan's income elasticity of demand for hamburger is

Accepted Answer

A)  positive, so Joan considers hamburger to be an inferior good.
B)  positive, so Joan considers hamburger to be a normal good and a necessity.
C)  negative, so Joan considers hamburger to be an inferior good.
D)  negative, so Joan considers hamburger to be a normal good but not a necessity.E) B) and C)
F) A) and B)

Question 8

Suppose researchers at the University of Wisconsin discover a new vitamin that increases the milk production of dairy cows. If the demand for milk is relatively inelastic, the discovery will

Accepted Answer

A)  raise both price and total revenues.
B)  lower both price and total revenues.
C)  raise price and lower total revenues.
D)  lower price and raise total revenues.E) A) and D)
F) A) and C)

Question 9

Suppose that corn farmers want to increase their total revenue. Knowing that the demand for corn is inelastic, corn farmers should

Accepted Answer

A)  plant more corn so that they would be able to sell more each year.
B)  increase spending on fertilizer in an attempt to produce more corn on the acres they farm.
C)  reduce the number of acres on which they plant corn.
D)  contribute to a fund that promotes technological advances in corn production.E) B) and C)
F) A) and C)

Question 10

Suppose that quantity demand falls by 30% as a result of a 5% increase in price. The price elasticity of demand for this good is

Accepted Answer

A)  inelastic and equal to 6.
B)  elastic and equal to 6.
C)  inelastic and equal to 0.17.
D)  elastic and equal to 0.17.E) B) and C)
F) A) and D)

Question 11

Figure 5-1 
-Refer to Figure 5-1. Between point A and point B on the graph, demand is

Accepted Answer

A)  perfectly elastic.
B)  inelastic.
C)  unit elastic.
D)  elastic, but not perfectly elastic.E) A) and B)
F) A) and C)

Question 12

Table 5-4
   Prica  Tatal  Revenup $10$100$12$108$14$112$16$112\begin{array} { | c | c } \hline 	ext { Prica } & \begin{array} { c } 	ext { Tatal } \	ext { Revenup }\end{array} \\hline \$ 10 & \$ 100 \\hline \$ 12 & \$ 108 \\hline \$ 14 & \$ 112 \\hline \$ 16 & \$ 112 \\hline\end{array} Prica $10$12$14$16​ Tatal  Revenup ​$100$108$112$112​​ 
-Refer to Table 5-4. Demand is unit elastic when quantity demanded changes from

Accepted Answer

A)  10 to 9.
B)  9 to 8.
C)  8 to 7.
D)  There is not enough information given to determine the correct answer. E) B) and C)
F) A) and C)

Question 13

Cross-price elasticity is used to determine whether goods are inferior or normal goods.

Accepted Answer

A) True 
 B)False

Question 14

Supply tends to be more elastic in the short run and more inelastic in the long run.

Accepted Answer

A) True 
 B)False

Question 15

Figure 5-14 
-Refer to Figure 5-14. Using the midpoint method, what is the price elasticity of supply between points B and C?

Accepted Answer

A)  1.67
B)  1.19
C)  0.84
D)  0.61E) B) and C)
F) A) and C)

Question 16

Figure 5-7 
-Refer to Figure 5-7. 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) B) and C)
F) B) and D)

Question 17

Even the demand for a necessity such as gasoline will respond to a change in price, especially over a longer time horizon.

Accepted Answer

A) True 
 B)False

Question 18

If the price of milk rises, when is the price elasticity of demand likely to be the lowest?

Accepted Answer

A)  immediately after the price increase
B)  one month after the price increase
C)  three months after the price increase
D)  one year after the price increaseE) All of the above
F) B) and D)

Question 19

If sellers do not adjust their quantity supplied at all in response to a change in price, the price elasticity of supply is

Accepted Answer

A)  zero, and the supply curve is horizontal.
B)  zero, and the supply curve is vertical.
C)  infinity, and the supply curve is horizontal.
D)  infinity, and the supply curve is vertical.E) A) and B)
F) A) and C)

Question 20

Demand is said to be unit elastic if quantity demanded

Accepted Answer

A)  changes by the same percent as the price.
B)  changes by a larger percent than the price.
C)  changes by a smaller percent than the price.
D)  does not respond to a change in price.E) None of the above
F) All of the above

Exam 5: Elasticity and Its Application

Last year, Joan bought 50 pounds of hamburger when her household's income was $40,000. This year, her household income was only $30,000 and Joan bought 60 pounds of hamburger. All else constant, Joan's income elasticity of demand for hamburger is

Correct Answer
verified

Suppose that quantity demand falls by 30% as a result of a 5% increase in price. The price elasticity of demand for this good is

Correct Answer
verified

A government program that reduces land under cultivation hurts farmers but helps consumers.

Correct Answer
verified

If sellers do not adjust their quantity supplied at all in response to a change in price, the price elasticity of supply is

Correct Answer
verified

Cross-price elasticity is used to determine whether goods are inferior or normal goods.

Correct Answer
verified

Correct Answer
verified

Figure 5-14 -Refer to Figure 5-14. Using the midpoint method, what is the price elasticity of supply between points B and C?

Correct Answer
verified

Figure 5-13 -Refer to Figure 5-13. Over which range is the supply curve in this figure the most elastic?

Correct Answer
verified

Even the demand for a necessity such as gasoline will respond to a change in price, especially over a longer time horizon.

Correct Answer
verified

Figure 5-7 -Refer to Figure 5-7. For prices above $8, demand is price

Correct Answer
verified

Suppose researchers at the University of Wisconsin discover a new vitamin that increases the milk production of dairy cows. If the demand for milk is relatively inelastic, the discovery will

Correct Answer
verified

If the price of milk rises, when is the price elasticity of demand likely to be the lowest?

Correct Answer
verified

Supply tends to be more elastic in the short run and more inelastic in the long run.

Correct Answer
verified

Which of the following could be the price elasticity of demand for a good for which an increase in price would decrease revenue?

Correct Answer
verified

Figure 5-1 -Refer to Figure 5-1. Between point A and point B on the graph, demand is

Correct Answer
verified

Knowing that the demand for wheat is inelastic, if all farmers voluntarily did not plant wheat on 10 percent of their land, then

Correct Answer
verified

Correct Answer
verified

For a particular good, a 5 percent increase in price causes a 15 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Correct Answer
verified

Suppose that corn farmers want to increase their total revenue. Knowing that the demand for corn is inelastic, corn farmers should

Correct Answer
verified

Demand is said to be unit elastic if quantity demanded

Correct Answer
verified

Exam 5: Elasticity and Its Application

Last year, Joan bought 50 pounds of hamburger when her household's income was $40,000. This year, her household income was only $30,000 and Joan bought 60 pounds of hamburger. All else constant, Joan's income elasticity of demand for hamburger is

Correct AnswerverifiedShow Answer

Suppose that quantity demand falls by 30% as a result of a 5% increase in price. The price elasticity of demand for this good is

Correct AnswerverifiedShow Answer

A government program that reduces land under cultivation hurts farmers but helps consumers.

Correct AnswerverifiedShow Answer

If sellers do not adjust their quantity supplied at all in response to a change in price, the price elasticity of supply is

Correct AnswerverifiedShow Answer

Cross-price elasticity is used to determine whether goods are inferior or normal goods.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 5-14 -Refer to Figure 5-14. Using the midpoint method, what is the price elasticity of supply between points B and C?

Correct AnswerverifiedShow Answer

Figure 5-13 -Refer to Figure 5-13. Over which range is the supply curve in this figure the most elastic?

Correct AnswerverifiedShow Answer

Even the demand for a necessity such as gasoline will respond to a change in price, especially over a longer time horizon.

Correct AnswerverifiedShow Answer

Figure 5-7 -Refer to Figure 5-7. For prices above $8, demand is price

Correct AnswerverifiedShow Answer

Suppose researchers at the University of Wisconsin discover a new vitamin that increases the milk production of dairy cows. If the demand for milk is relatively inelastic, the discovery will

Correct AnswerverifiedShow Answer

If the price of milk rises, when is the price elasticity of demand likely to be the lowest?

Correct AnswerverifiedShow Answer

Supply tends to be more elastic in the short run and more inelastic in the long run.

Correct AnswerverifiedShow Answer

Which of the following could be the price elasticity of demand for a good for which an increase in price would decrease revenue?

Correct AnswerverifiedShow Answer

Figure 5-1 -Refer to Figure 5-1. Between point A and point B on the graph, demand is

Correct AnswerverifiedShow Answer

Knowing that the demand for wheat is inelastic, if all farmers voluntarily did not plant wheat on 10 percent of their land, then

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

For a particular good, a 5 percent increase in price causes a 15 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Correct AnswerverifiedShow Answer

Suppose that corn farmers want to increase their total revenue. Knowing that the demand for corn is inelastic, corn farmers should

Correct AnswerverifiedShow Answer

Demand is said to be unit elastic if quantity demanded

Correct AnswerverifiedShow Answer

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