Question 1

Fiona's Fish Emporium increased its total monthly revenue from $1,500 to $1,800 when it raised the price of tropical fish from $5 to $9.The price elasticity of demand for Fiona's Fish Emporium is

Accepted Answer

A)   0.57.
B)   0.70.
C)   1.43.
D)   2.20.E) B) and C)
F) All of the above

Question 2

In January the price of widgets was $1.00,and Wendy's Widgets produced 80 widgets.In February the price of widgets was $1.50,and Wendy's Widgets produced 110 widgets.In March the price of widgets was $2.00,and Wendy's Widgets produced 140 widgets.The price elasticity of supply of Wendy's Widgets was about

Accepted Answer

A)   0.79 when the price increased from $1.00 to $1.50 and 0.84 when the price increased from $1.50 to $2.00.
B)   1.27 when the price increased from $1.00 to $1.50 and 1.19 when the price increased from $1.50 to $2.00.
C)   0.79 when the price increased from $1.00 to $1.50 and 1.19 when the price increased from $1.50 to $2.00.
D)   1.27 when the price increased from $1.00 to $1.50 and 0.84 when the price increased from $1.50 to $2.00.E) None of the above
F) A) and B)

Question 3

When demand is inelastic,a decrease 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) A) and C)
F) B) and C)

Question 4

The price elasticity of demand for a good measures the willingness of

Accepted Answer

A)   consumers to buy less of the good as price rises.
B)   consumers to avoid monopolistic markets in favor of competitive markets.
C)   firms to produce more of a good as price rises.
D)   firms to respond to the tastes of consumers.E) A) and D)
F) A) and C)

Question 5

A bakery would be willing to supply 500 bagels per day at a price of $0.50 each.At a price of $0.80,the bakery would be willing to supply 1,100 bagels.Using the midpoint method,the price elasticity of supply for bagels is about

Accepted Answer

A)   0.62.
B)   0.77.
C)   1.24.
D)   1.63.E) B) and C)
F) A) and D)

Question 6

A discovery that increases wheat yields per acre hurts farmers by increasing supply and lowering their total revenues.

Accepted Answer

A) True 
 B)False

Question 7

A government program that pays farmers not to plant corn on part of their land can help farmers not only through the subsidy payments to farmers who participate in the program but also by raising the market price of corn.

Accepted Answer

A) True 
 B)False

Question 8

Suppose that 50 ice cream cones are demanded at a particular price.If the price of ice cream cones rises from that price by 4 percent,the number of ice cream cones demanded falls to 46.Using the midpoint approach to calculate the price elasticity of demand,it follows that the

Accepted Answer

A)   demand for ice cream cones in this price range is elastic.
B)   demand for ice cream cones in this price range is inelastic.
C)   demand for ice cream cones in this price range is unit elastic.
D)   price elasticity of demand for ice cream cones in this price range is 0.E) All of the above
F) A) and B)

Question 9

You have just been hired as a business consultant to determine what pricing policy would be appropriate in order to increase the total revenue of a bakery.The first step you would take would be to

Accepted Answer

A)   increase the price of every loaf of bread in the store.
B)   look for ways to cut costs and increase profit for the bakery.
C)   determine the price elasticity of demand for the bakery's products.
D)   determine the price elasticity of supply for the bakery's products.E) A) and C)
F) B) and C)

Question 10

For a good that is a necessity,demand

Accepted Answer

A)   tends to be inelastic.
B)   tends to be elastic.
C)   has unit elasticity.
D)   cannot be represented by a demand curve in the usual way.E) A) and D)
F) None of the above

Question 11

If two goods are substitutes,their cross-price elasticity will be

Accepted Answer

A)   positive.
B)   negative.
C)   zero.
D)   equal to the difference between the income elasticities of demand for the two goods.E) A) and B)
F) A) and C)

Question 12

Consider the following pairs of goods.For which of the two goods would you expect the demand to be more price elastic? Why?

Accepted Answer

a.Diamonds are luxuries,and water is a n...

Question 13

OPEC successfully raised the world price of oil in the 1970s and early 1980s,primarily due to

Accepted Answer

A)   an inelastic demand for oil and a reduction in the amount of oil supplied.
B)   a reduction in the amount of oil supplied and a world-wide oil embargo.
C)   a world-wide oil embargo and an elastic demand for oil.
D)   a reduction in the amount of oil supplied and an elastic demand for oil.E) B) and C)
F) All of the above

Question 14

Which of the following is not a determinant of the price elasticity of demand for a good?

Accepted Answer

A)   the time horizon
B)   the steepness or flatness of the supply curve for the good
C)   the definition of the market for the good
D)   the availability of substitutes for the goodE) A) and B)
F) None of the above

Question 15

Table 5-5
 
-Refer to Table 5-5.Which of the three supply curves represents the least elastic supply?

Accepted Answer

A)   supply curve A
B)   supply curve B
C)   supply curve C
D)   There is no difference in the elasticity of the three supply curves.E) B) and C)
F) All of the above

Question 16

Suppose that when the price of ginger ale is $2 per bottle,firms can sell 4 million bottles.When the price of ginger ale is $3 per bottle,firms can sell 2 million bottles.Which of the following statements is true?

Accepted Answer

A)   The demand for ginger ale is income inelastic, so an increase in the price of ginger ale will increase the total revenue of ginger ale producers.
B)   The demand for ginger ale is income elastic, so an increase in the price of ginger ale will increase the total revenue of ginger ale producers.
C)   The demand for ginger ale is price inelastic, so an increase in the price of ginger ale will increase the total revenue of ginger ale producers.
D)   The demand for ginger ale is price elastic, so an increase in the price of ginger ale will decrease the total revenue of ginger ale producers.E) All of the above
F) B) and C)

Question 17

The demand for Rice Krispies is more elastic than the demand for cereal in general.

Accepted Answer

A) True 
 B)False

Question 18

If the cross-price elasticity of demand for two goods is negative,then the two goods are substitutes.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A)   chocolate
B)   Godiva chocolate
C)   Hershey's chocolate
D)   All three would have the same elasticity of demand because they are all related.E) A) and B)
F) A) and C)

Question 20

If the price elasticity of demand for a good is 4,then a 12 percent decrease in price results in a

Accepted Answer

A)   0.33 percent increase in the quantity demanded.
B)   3 percent increase in the quantity demanded.
C)   30 percent increase in the quantity demanded.
D)   48 percent increase in the quantity demanded.E) B) and C)
F) A) and C)

Exam 5: Elasticity and Its Application

The price elasticity of demand for a good measures the willingness of

Correct Answer
verified

Fiona's Fish Emporium increased its total monthly revenue from $1,500 to $1,800 when it raised the price of tropical fish from $5 to $9.The price elasticity of demand for Fiona's Fish Emporium is

Correct Answer
verified

Suppose that when the price of ginger ale is $2 per bottle,firms can sell 4 million bottles.When the price of ginger ale is $3 per bottle,firms can sell 2 million bottles.Which of the following statements is true?

Correct Answer
verified

For a good that is a necessity,demand

Correct Answer
verified

A discovery that increases wheat yields per acre hurts farmers by increasing supply and lowering their total revenues.

Correct Answer
verified

A bakery would be willing to supply 500 bagels per day at a price of $0.50 each.At a price of $0.80,the bakery would be willing to supply 1,100 bagels.Using the midpoint method,the price elasticity of supply for bagels is about

Correct Answer
verified

If the price elasticity of demand for a good is 4,then a 12 percent decrease in price results in a

Correct Answer
verified

Consider the following pairs of goods.For which of the two goods would you expect the demand to be more price elastic? Why?

Correct Answer
verified
a.Diamonds are luxuries,and water is a n...
View Answer

The demand for Rice Krispies is more elastic than the demand for cereal in general.

Correct Answer
verified

Which of the following is not a determinant of the price elasticity of demand for a good?

Correct Answer
verified

If two goods are substitutes,their cross-price elasticity will be

Correct Answer
verified

A government program that pays farmers not to plant corn on part of their land can help farmers not only through the subsidy payments to farmers who participate in the program but also by raising the market price of corn.

Correct Answer
verified

Suppose that 50 ice cream cones are demanded at a particular price.If the price of ice cream cones rises from that price by 4 percent,the number of ice cream cones demanded falls to 46.Using the midpoint approach to calculate the price elasticity of demand,it follows that the

Correct Answer
verified

When demand is inelastic,a decrease in price will cause

Correct Answer
verified

If the cross-price elasticity of demand for two goods is negative,then the two goods are substitutes.

Correct Answer
verified

Table 5-5 -Refer to Table 5-5.Which of the three supply curves represents the least elastic supply?

Correct Answer
verified

You have just been hired as a business consultant to determine what pricing policy would be appropriate in order to increase the total revenue of a bakery.The first step you would take would be to

Correct Answer
verified

OPEC successfully raised the world price of oil in the 1970s and early 1980s,primarily due to

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Exam 5: Elasticity and Its Application

The price elasticity of demand for a good measures the willingness of

Correct AnswerverifiedShow Answer

Fiona's Fish Emporium increased its total monthly revenue from $1,500 to $1,800 when it raised the price of tropical fish from $5 to $9.The price elasticity of demand for Fiona's Fish Emporium is

Correct AnswerverifiedShow Answer

Suppose that when the price of ginger ale is $2 per bottle,firms can sell 4 million bottles.When the price of ginger ale is $3 per bottle,firms can sell 2 million bottles.Which of the following statements is true?

Correct AnswerverifiedShow Answer

For a good that is a necessity,demand

Correct AnswerverifiedShow Answer

A discovery that increases wheat yields per acre hurts farmers by increasing supply and lowering their total revenues.

Correct AnswerverifiedShow Answer

A bakery would be willing to supply 500 bagels per day at a price of $0.50 each.At a price of $0.80,the bakery would be willing to supply 1,100 bagels.Using the midpoint method,the price elasticity of supply for bagels is about

Correct AnswerverifiedShow Answer

If the price elasticity of demand for a good is 4,then a 12 percent decrease in price results in a

Correct AnswerverifiedShow Answer

Consider the following pairs of goods.For which of the two goods would you expect the demand to be more price elastic? Why?

Correct Answerverifieda.Diamonds are luxuries,and water is a n...View AnswerShow Answer

The demand for Rice Krispies is more elastic than the demand for cereal in general.

Correct AnswerverifiedShow Answer

Which of the following is not a determinant of the price elasticity of demand for a good?

Correct AnswerverifiedShow Answer

If two goods are substitutes,their cross-price elasticity will be

Correct AnswerverifiedShow Answer

A government program that pays farmers not to plant corn on part of their land can help farmers not only through the subsidy payments to farmers who participate in the program but also by raising the market price of corn.

Correct AnswerverifiedShow Answer

Suppose that 50 ice cream cones are demanded at a particular price.If the price of ice cream cones rises from that price by 4 percent,the number of ice cream cones demanded falls to 46.Using the midpoint approach to calculate the price elasticity of demand,it follows that the

Correct AnswerverifiedShow Answer

When demand is inelastic,a decrease in price will cause

Correct AnswerverifiedShow Answer

If the cross-price elasticity of demand for two goods is negative,then the two goods are substitutes.

Correct AnswerverifiedShow Answer

Table 5-5 -Refer to Table 5-5.Which of the three supply curves represents the least elastic supply?

Correct AnswerverifiedShow Answer

You have just been hired as a business consultant to determine what pricing policy would be appropriate in order to increase the total revenue of a bakery.The first step you would take would be to

Correct AnswerverifiedShow Answer

OPEC successfully raised the world price of oil in the 1970s and early 1980s,primarily due to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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a.Diamonds are luxuries,and water is a n...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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