Question 1

The demand for soap is more elastic than the demand for Dove soap.

Accepted Answer

A) True 
 B)False

Question 2

Figure 5-5 
-Refer to Figure 5-5. At a price of $10 per unit, sellers' total revenue equals

Accepted Answer

A)   $100.
B)   $450
C)   $500.
D)   $1250.E) A) and D)
F) None of the above

Question 3

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

Accepted Answer

A)   0.8
B)   1
C)   1.8
D)   2.4E) B) and D)
F) B) and C)

Question 4

If the price elasticity of demand for a good is 0.5, then a 5 percent increase in price results in a

Accepted Answer

A)   0.1 percent decrease in the quantity demanded.
B)   1 percent decrease in the quantity demanded.
C)   2.5 percent decrease in the quantity demanded.
D)   10 percent decrease in the quantity demanded.E) A) and B)
F) A) and C)

Question 5

If the price elasticity of demand for a good is 0.2, then a 3 percent decrease in price results in a

Accepted Answer

A)   0.6 percent increase in the quantity demanded.
B)   1.5 percent increase in the quantity demanded.
C)   2 percent increase in the quantity demanded.
D)   6 percent increase in the quantity demanded.E) None of the above
F) A) and B)

Question 6

If the price elasticity of supply is 0.4, and a price increase led to a 5% increase in quantity supplied, then the price increase is about

Accepted Answer

A)   0.25%.
B)   1.2%.
C)   2%.
D)   12.5%.E) A) and B)
F) A) and C)

Question 7

Suppose that gasoline prices increase dramatically this month. Lola commutes 100 miles to work each weekday. Over the next few months, Lola drives less on the weekends to try to save money. Within the year, she sells her home and purchases one only 10 miles from her place of employment. These examples illustrate the importance of

Accepted Answer

A)   the availability of substitutes in determining the price elasticity of demand.
B)   a necessity versus a luxury in determining the price elasticity of demand.
C)   the definition of a market in determining the price elasticity of demand.
D)   the time horizon in determining the price elasticity of demand.E) A) and B)
F) C) and D)

Question 8

If soybean farmers know that the demand for soybeans is inelastic, in order to increase their total revenues they should

Accepted Answer

A)   use more fertilizers and weed killers to increase their yields.
B)   plant additional acres to increase their output.
C)   reduce the number of acres they plant to decrease their output.
D)   Both a and b are correct.E) All of the above
F) A) and C)

Question 9

If the price elasticity of supply is 1.2, and a price increase led to a 5% increase in quantity supplied, then the price increase is about

Accepted Answer

A)   0.24%.
B)   4.2%.
C)   6%.
D)   6.2%.E) None of the above
F) B) and C)

Question 10

If the price elasticity of demand for a good is 1, then a 3 percent decrease in price results in a

Accepted Answer

A)   0.1 percent increase in the quantity demanded.
B)   1 percent increase in the quantity demanded.
C)   3 percent increase in the quantity demanded.
D)   4 percent increase in the quantity demanded.E) B) and C)
F) A) and D)

Question 11

Suppose demand is given by the equation:  At what point along this demand curve will total revenue be maximized?

Accepted Answer

Total revenue is con...

Question 12

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 D)
F) B) and C)

Question 13

Table 5-5
 
-Refer to Table 5-5. Demand is unit elastic when quantity demanded changes from

Accepted Answer

A)   9 to 8.
B)   10 to 9.
C)   10 to 11.
D)   There is not enough information given to determine the correct answer.E) None of the above
F) All of the above

Question 14

A good will have a more inelastic demand, the

Accepted Answer

A)   greater the availability of close substitutes.
B)   broader the definition of the market.
C)   longer the period of time.
D)   more it is regarded as a luxury.E) A) and D)
F) None of the above

Question 15

A key determinant of the price elasticity of supply is the

Accepted Answer

A)   time horizon.
B)   income of consumers.
C)   price elasticity of demand.
D)   importance of the good in a consumer's budget.E) A) and B)
F) A) and C)

Question 16

In the early 1970s, OPEC's goal was to

Accepted Answer

A)   decrease the world-wide price of oil so that the quantity demanded increased, thus raising total revenues for OPEC members.
B)   increase the world-wide price of oil by reducing the quantity of oil supplied.
C)   increase the world-wide price of oil by increasing the quantity of oil supplied, thus raising total revenues for OPEC members.
D)   decrease the world-wide price of oil so that quantity demanded increased.E) A) and B)
F) A) and C)

Question 17

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) A) and C)
F) B) and D)

Question 18

On a downward-sloping linear demand curve, total revenue reaches its maximum value at the

Accepted Answer

A)   midpoint of the demand curve.
B)   lower end of the demand curve.
C)   upper end of the demand curve.
D)   It is impossible to tell without knowing prices and quantities demanded.E) A) and C)
F) B) and C)

Question 19

If demand is perfectly inelastic, the demand curve is vertical, and the price elasticity of demand equals 0.

Accepted Answer

A) True 
 B)False

Question 20

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) C) and D)
F) B) and D)

Exam 5: Elasticity and Its Application

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

Correct Answer
verified

The demand for soap is more elastic than the demand for Dove soap.

Correct Answer
verified

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

Correct Answer
verified

If soybean farmers know that the demand for soybeans is inelastic, in order to increase their total revenues they should

Correct Answer
verified

If demand is perfectly inelastic, the demand curve is vertical, and the price elasticity of demand equals 0.

Correct Answer
verified

In the early 1970s, OPEC's goal was to

Correct Answer
verified

Figure 5-5 -Refer to Figure 5-5. At a price of $10 per unit, sellers' total revenue equals

Correct Answer
verified

If the price elasticity of demand for a good is 0.5, then a 5 percent increase in price results in a

Correct Answer
verified

If the price elasticity of supply is 0.4, and a price increase led to a 5% increase in quantity supplied, then the price increase is about

Correct Answer
verified

A key determinant of the price elasticity of supply is the

Correct Answer
verified

A good will have a more inelastic demand, the

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

If the price elasticity of demand for a good is 1, then a 3 percent decrease in price results in a

Correct Answer
verified

Table 5-5 -Refer to Table 5-5. Demand is unit elastic when quantity demanded changes from

Correct Answer
verified

Suppose demand is given by the equation: At what point along this demand curve will total revenue be maximized?

Correct Answer
verified
Total revenue is con...
View Answer

If the price elasticity of demand for a good is 0.2, then a 3 percent decrease in price results in a

Correct Answer
verified

On a downward-sloping linear demand curve, total revenue reaches its maximum value at the

Correct Answer
verified

If the price elasticity of supply is 1.2, and a price increase led to a 5% increase in quantity supplied, then the price increase is about

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Exam 5: Elasticity and Its Application

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

Correct AnswerverifiedShow Answer

The demand for soap is more elastic than the demand for Dove soap.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If soybean farmers know that the demand for soybeans is inelastic, in order to increase their total revenues they should

Correct AnswerverifiedShow Answer

If demand is perfectly inelastic, the demand curve is vertical, and the price elasticity of demand equals 0.

Correct AnswerverifiedShow Answer

In the early 1970s, OPEC's goal was to

Correct AnswerverifiedShow Answer

Figure 5-5 -Refer to Figure 5-5. At a price of $10 per unit, sellers' total revenue equals

Correct AnswerverifiedShow Answer

If the price elasticity of demand for a good is 0.5, then a 5 percent increase in price results in a

Correct AnswerverifiedShow Answer

If the price elasticity of supply is 0.4, and a price increase led to a 5% increase in quantity supplied, then the price increase is about

Correct AnswerverifiedShow Answer

A key determinant of the price elasticity of supply is the

Correct AnswerverifiedShow Answer

A good will have a more inelastic demand, the

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

If the price elasticity of demand for a good is 1, then a 3 percent decrease in price results in a

Correct AnswerverifiedShow Answer

Table 5-5 -Refer to Table 5-5. Demand is unit elastic when quantity demanded changes from

Correct AnswerverifiedShow Answer

Suppose demand is given by the equation: At what point along this demand curve will total revenue be maximized?

Correct AnswerverifiedTotal revenue is con...View AnswerShow Answer

If the price elasticity of demand for a good is 0.2, then a 3 percent decrease in price results in a

Correct AnswerverifiedShow Answer

On a downward-sloping linear demand curve, total revenue reaches its maximum value at the

Correct AnswerverifiedShow Answer

If the price elasticity of supply is 1.2, and a price increase led to a 5% increase in quantity supplied, then the price increase is about

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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Total revenue is con...
View Answer

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