Question 1

Figure 5-12 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 5-12. 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.

Question 2

Figure 5-4 
-Refer to Figure 5-4. The section of the demand curve at point B represents the

Accepted Answer

A)  elastic section of the demand curve.
B)  inelastic section of the demand curve.
C)  unit elastic section of the demand curve.
D)  perfectly elastic section of the demand curve.

Question 3

Supply and demand both tend to be more elastic in the long run and more inelastic in the short run.

Accepted Answer

A) True 
 B)False

Question 4

Figure 5-1 
-Refer to Figure 5-1. Between point A and point B, the slope is equal to

Accepted Answer

A)  -1/4, and the price elasticity of demand is equal to 2/3.
B)  -1/4, and the price elasticity of demand is equal to 3/2.
C)  -3/2, and the price elasticity of demand is equal to 1/4.
D)  -2/3, and the price elasticity of demand is equal to 3/2.

Question 5

If we observe that when the price of chocolate increases by 10%, total revenue increases by 10%, then the demand for chocolate is unit price elastic.

Accepted Answer

A) True 
 B)False

Question 6

Suppose demand is perfectly inelastic, and the supply of the good in question decreases. As a result,

Accepted Answer

A)  the equilibrium quantity decreases, and the equilibrium price is unchanged.
B)  the equilibrium price increases, and the equilibrium quantity is unchanged.
C)  the equilibrium quantity and the equilibrium price both are unchanged.
D)  buyers' total expenditure on the good is unchanged.

Question 7

Good news for farming can be bad news for farmers because the

Accepted Answer

A)  supply curve for an individual farmer is usually perfectly elastic.
B)  supply curve for an individual farmer is usually perfectly inelastic.
C)  demand for basic foodstuffs is usually inelastic, meaning that factors that shift supply to the right decrease total revenues to sellers.
D)  demand for basic foodstuffs is usually elastic, meaning that factors that shift supply to the right increase total revenues to sellers.

Question 8

If a firm is facing inelastic demand, then the firm should decrease price to increase revenue.

Accepted Answer

A) True 
 B)False

Question 9

A linear, upward-sloping supply curve has

Accepted Answer

A)  a constant slope and a changing price elasticity of supply.
B)  a changing slope and a constant price elasticity of supply.
C)  both a constant slope and a constant price elasticity of supply.
D)  both a changing slope and a changing price elasticity of supply.

Question 10

The OPEC oil cartel has difficulty maintaining high prices in the long run because the supply of oil is more inelastic in the long run than in the short run.

Accepted Answer

A) True 
 B)False

Question 11

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 12

An advantage of using the midpoint method to calculate the price elasticity of demand is that it uses the metric system.

Accepted Answer

A) True 
 B)False

Question 13

When we move upward and to the left along a linear, downward-sloping demand curve, price elasticity of demand

Accepted Answer

A)  first becomes smaller, then larger.
B)  always becomes larger.
C)  always becomes smaller.
D)  first becomes larger, then smaller.

Question 14

Figure 5-18 
-Refer to Figure 5-18. Which supply curve represents perfectly inelastic supply?

Accepted Answer

A)  S1
B)  S2
C)  S3
D)  None of the supply curves is perfectly inelastic.

Question 15

Assume that a 4 percent increase in income results in a 2 percent increase in the quantity demanded of a good. The income elasticity of demand for the good is

Accepted Answer

A)  negative, and the good is an inferior good.
B)  negative, and the good is a normal good.
C)  positive, and the good is a normal good.
D)  positive, and the good is an inferior good.

Question 16

Table 5-2
   Priea  Quintit $1000$8010$6020$4030$2040$050\begin{array} { | l | l | } \hline 	ext { Priea } & 	ext { Quintit } \\hline \$ 100 & 0 \\hline \$ 80 & 10 \\hline \$ 60 & 20 \\hline \$ 40 & 30 \\hline \$ 20 & 40 \\hline \$ 0 & 50 \\hline\end{array} Priea $100$80$60$40$20$0​ Quintit 01020304050​​ 
-Refer to Table 5-2. Using the midpoint method, if the price falls from $40 to $20, the absolute value of the price elasticity of demand is

Accepted Answer

A)   20.
B)   10.
C)   2.33.
D)   0.43.

Question 17

For a particular good, a 2 percent increase in price causes a 12 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Accepted Answer

A)  There are no close substitutes for this good.
B)  The good is a luxury.
C)  The market for the good is broadly defined.
D)  The relevant time horizon is short.

Question 18

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.

Question 19

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 20

Total revenue

Accepted Answer

A)  always increases as price increases.
B)  increases as price increases, as long as demand is elastic.
C)  decreases as price increases, as long as demand is inelastic.
D)  remains unchanged as price increases when demand is unit elastic.

Exam 5: Elasticity and Its Application

Supply and demand both tend to be more elastic in the long run and more inelastic in the short run.

Correct Answer
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Figure 5-1 -Refer to Figure 5-1. Between point A and point B, the slope is equal to

Correct Answer
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The OPEC oil cartel has difficulty maintaining high prices in the long run because the supply of oil is more inelastic in the long run than in the short run.

Correct Answer
verified

A linear, upward-sloping supply curve has

Correct Answer
verified

Good news for farming can be bad news for farmers because the

Correct Answer
verified

Assume that a 4 percent increase in income results in a 2 percent increase in the quantity demanded of a good. The income elasticity of demand for the good is

Correct Answer
verified

An advantage of using the midpoint method to calculate the price elasticity of demand is that it uses the metric system.

Correct Answer
verified

Suppose demand is perfectly inelastic, and the supply of the good in question decreases. As a result,

Correct Answer
verified

Figure 5-12 -Refer to Figure 5-12. Total revenue when the price is P₁ is represented by the area(s)

Correct Answer
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For a particular good, a 2 percent increase in price causes a 12 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Correct Answer
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Total revenue

Correct Answer
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If a firm is facing inelastic demand, then the firm should decrease price to increase revenue.

Correct Answer
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Figure 5-18 -Refer to Figure 5-18. Which supply curve represents perfectly inelastic supply?

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

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

Correct Answer
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Figure 5-4 -Refer to Figure 5-4. The section of the demand curve at point B represents the

Correct Answer
verified

If we observe that when the price of chocolate increases by 10%, total revenue increases by 10%, then the demand for chocolate is unit price elastic.

Correct Answer
verified

Correct Answer
verified

When we move upward and to the left along a linear, downward-sloping demand curve, price elasticity of demand

Correct Answer
verified

Exam 5: Elasticity and Its Application

Supply and demand both tend to be more elastic in the long run and more inelastic in the short run.

Correct AnswerverifiedShow Answer

Figure 5-1 -Refer to Figure 5-1. Between point A and point B, the slope is equal to

Correct AnswerverifiedShow Answer

The OPEC oil cartel has difficulty maintaining high prices in the long run because the supply of oil is more inelastic in the long run than in the short run.

Correct AnswerverifiedShow Answer

A linear, upward-sloping supply curve has

Correct AnswerverifiedShow Answer

Good news for farming can be bad news for farmers because the

Correct AnswerverifiedShow Answer

Assume that a 4 percent increase in income results in a 2 percent increase in the quantity demanded of a good. The income elasticity of demand for the good is

Correct AnswerverifiedShow Answer

An advantage of using the midpoint method to calculate the price elasticity of demand is that it uses the metric system.

Correct AnswerverifiedShow Answer

Suppose demand is perfectly inelastic, and the supply of the good in question decreases. As a result,

Correct AnswerverifiedShow Answer

Figure 5-12 -Refer to Figure 5-12. Total revenue when the price is P1 is represented by the area(s)

Correct AnswerverifiedShow Answer

For a particular good, a 2 percent increase in price causes a 12 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Correct AnswerverifiedShow Answer

Total revenue

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If a firm is facing inelastic demand, then the firm should decrease price to increase revenue.

Correct AnswerverifiedShow Answer

Figure 5-18 -Refer to Figure 5-18. Which supply curve represents perfectly inelastic supply?

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

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

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

Correct AnswerverifiedShow Answer

Figure 5-4 -Refer to Figure 5-4. The section of the demand curve at point B represents the

Correct AnswerverifiedShow Answer

If we observe that when the price of chocolate increases by 10%, total revenue increases by 10%, then the demand for chocolate is unit price elastic.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When we move upward and to the left along a linear, downward-sloping demand curve, price elasticity of demand

Correct AnswerverifiedShow Answer

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Figure 5-12 -Refer to Figure 5-12. Total revenue when the price is P₁ is represented by the area(s)

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In the section of the demand curve from ...
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