Question 1

A manufacturer produces 400 units when the market price of $10 per unit and produces 600 units when the market price is $12 per unit.Using the midpoint method,for this range of prices,the price elasticity of supply is about

Accepted Answer

A)   0.45.
B)   2.0.
C)   2.2.
D)   200.E) B) and C)
F) B) and D)

Question 2

Figure 5-9
  P₁.In which of the following cases could we possibly find that (i) demand is elastic and (ii) an increase in price from P₁ to P₂ causes an increase in total revenue? A)  0  $15. D)  None of the above is correct." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 5-9.Suppose this demand curve is a straight,downward-sloping line all the way from the horizontal intercept to the vertical intercept.We choose two prices,P₁ and P₂,and the corresponding quantities demanded,Q₁ and Q₂,for the purpose of calculating the price elasticity of demand.Also suppose P₂ > P₁.In which of the following cases could we possibly find that (i) demand is elastic and (ii) an increase in price from P₁ to P₂ causes an increase in total revenue?

Accepted Answer

A)   0 
B)   $10 
C)   P1 > $15.
D)   None of the above is correct.E) A) and B)
F) None of the above

Question 3

Your younger sister needs $50 to buy a new bike.She has opened a lemonade stand to make the money she needs.Your mother is paying for all of the ingredients.She currently is charging 25 cents per cup,but she wants to adjust her price to earn the $50 faster.If you know that the demand for lemonade is elastic,what is your advice to her?

Accepted Answer

A)   Leave the price at 25 cents and be patient.
B)   Raise the price to increase total revenue.
C)   Lower the price to increase total revenue.
D)   There isn't enough information given to answer this question.E) A) and B)
F) C) and D)

Question 4

An increase in price causes an increase in total revenue when demand is

Accepted Answer

A)   elastic.
B)   inelastic.
C)   unit elastic.
D)   All of the above are possible.E) B) and C)
F) C) and D)

Question 5

Using the midpoint method,the price elasticity of demand for a good is computed to be approximately 0.75.Which of the following events is consistent with a 10 percent decrease in the quantity of the good demanded?

Accepted Answer

A)   a 7.5 increase in the price of the good
B)   a 13.33 percent increase in the price of the good
C)   an increase in the price of the good from $7.50 to $10
D)   an increase in the price of the good from $10 to $17.50E) A) and B)
F) None of the above

Question 6

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

Question 7

Scenario 5-3
Milk has an inelastic demand, and beef has an elastic demand. Suppose that a mysterious increase in bovine infertility decreases both the population of dairy cows and the population of beef cattle by 50 percent.
-Refer to Scenario 5-3.Total consumer spending on milk will

Accepted Answer

A)   increase, and total consumer spending on beef will increase.
B)   increase, and total consumer spending on beef will decrease.
C)   decrease, and total consumer spending on beef will increase.
D)   decrease, and total consumer spending on beef will decrease.E) A) and B)
F) A) and C)

Question 8

If a 20% increase in price for a good results in a 15% decrease in quantity demanded,the price elasticity of demand is

Accepted Answer

A)   0.75.
B)   1.25.
C)   1.33.
D)   1.60.E) A) and D)
F) B) and C)

Question 9

If the quantity supplied responds only slightly to changes in price,then

Accepted Answer

A)   supply is said to be elastic.
B)   supply is said to be inelastic.
C)   an increase in price will not shift the supply curve very much.
D)   even a large decrease in demand will change the equilibrium price only slightly.E) A) and B)
F) A) and C)

Question 10

Figure 5-4
 
-Refer to Figure 5-4.Assume the section of the demand curve from A to B corresponds to prices between $8 and $16.Then,when the price changes between $9 and $10,

Accepted Answer

A)   quantity demanded changes proportionately less than the price.
B)   quantity demanded changes proportionately more than the price.
C)   quantity demanded changes the same amount proportionately as price.
D)   the price elasticity of demand equals 1.E) None of the above
F) A) and B)

Exam 5: Elasticity and Its Application

Figure 5-4 -Refer to Figure 5-4.Assume the section of the demand curve from A to B corresponds to prices between $8 and $16.Then,when the price changes between $9 and $10,

Correct Answer
verified

An increase in price causes an increase in total revenue when demand is

Correct Answer
verified

Scenario 5-3 Milk has an inelastic demand, and beef has an elastic demand. Suppose that a mysterious increase in bovine infertility decreases both the population of dairy cows and the population of beef cattle by 50 percent. -Refer to Scenario 5-3.Total consumer spending on milk will

Correct Answer
verified

Correct Answer
verified

A manufacturer produces 400 units when the market price of $10 per unit and produces 600 units when the market price is $12 per unit.Using the midpoint method,for this range of prices,the price elasticity of supply is about

Correct Answer
verified

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

Using the midpoint method,the price elasticity of demand for a good is computed to be approximately 0.75.Which of the following events is consistent with a 10 percent decrease in the quantity of the good demanded?

Correct Answer
verified

Correct Answer
verified

If a 20% increase in price for a good results in a 15% decrease in quantity demanded,the price elasticity of demand is

Correct Answer
verified

If the quantity supplied responds only slightly to changes in price,then

Correct Answer
verified

Exam 5: Elasticity and Its Application

Figure 5-4 -Refer to Figure 5-4.Assume the section of the demand curve from A to B corresponds to prices between $8 and $16.Then,when the price changes between $9 and $10,

Correct AnswerverifiedShow Answer

An increase in price causes an increase in total revenue when demand is

Correct AnswerverifiedShow Answer

Scenario 5-3 Milk has an inelastic demand, and beef has an elastic demand. Suppose that a mysterious increase in bovine infertility decreases both the population of dairy cows and the population of beef cattle by 50 percent. -Refer to Scenario 5-3.Total consumer spending on milk will

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A manufacturer produces 400 units when the market price of $10 per unit and produces 600 units when the market price is $12 per unit.Using the midpoint method,for this range of prices,the price elasticity of supply is about

Correct AnswerverifiedShow Answer

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

Using the midpoint method,the price elasticity of demand for a good is computed to be approximately 0.75.Which of the following events is consistent with a 10 percent decrease in the quantity of the good demanded?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If a 20% increase in price for a good results in a 15% decrease in quantity demanded,the price elasticity of demand is

Correct AnswerverifiedShow Answer

If the quantity supplied responds only slightly to changes in price,then

Correct AnswerverifiedShow Answer

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