Chap 5 quiz

Table 5-3 Consider the following demand schedule. Price Quantity Demanded $0 1,000 $3 800 $6 600 $9 400 $12 200 $15 0 Refer to Table 5-3. Using the midpoint method, what is the price elasticity of demand between $0 and $3?

0.11

If a 6% decrease in price for a good results in a 2% increase in quantity demanded, the price elasticity of demand is

0.33.

Table 5-6 Price Total Revenue $10 $5,000 $15 $6,000 $20 $6,000 $25 $5,000 $30 $3,000 Refer to Table 5-6. As price rises from $10 to $15, the price elasticity of demand using the midpoint method is approximately

0.56.

On a certain supply curve, one point is (quantity supplied = 200, price = $2.00) and another point is (quantity supplied = 250, price = $2.50). Using the midpoint method, the price elasticity of supply is about

1.0.

Hilda's Hair Hysteria earned $3,750 in total revenue last month when it sold 125 haircuts. This month it earned $3,600 in total revenue when it sold 90 haircuts. The price elasticity of demand for Hilda's Hair Hysteria is

1.14.

Suppose that when the price of good X increases from $800 to $850, the quantity demanded of good Y increases from 65 to 70. Using the midpoint method, the cross price elasticity of demand is about

1.2, and X and Y are substitutes.

If a 15% change in price results in a 20% change in quantity supplied, then the price elasticity of supply is about

1.33, and supply is elastic.

Suppose the price elasticity of supply for minivans is 0.3 in the short run and 1.2 in the long run. If an increase in the demand for minivans causes the price of minivans to increase by 5%, then the quantity supplied of minivans will increase by about

1.5% in the short run and 6% in the long run.

The price of a good rises from $8 to $12, and the quantity demanded falls from 110 to 90 units. Calculated with the midpoint method, the price elasticity of demand is

1/2

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

2.5 percent decrease in the quantity demanded.

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

2.6

Between 1950 and today there was a

70 percent drop in the number of farmers, but farm output increased by about five times.

Table 5-1 Good Price Elasticity of Demand A 1.9 B 0.8 Refer to Table 5-1. Which of the following is consistent with the elasticities given in Table 5-1?

A is a luxury and B is a necessity.

Which of the following statements is valid when the market supply curve is vertical?

Market quantity supplied does not change when the price changes.

In which of the following situations will total revenue increase?

Price elasticity of demand is 1.2, and the price of the good decreases. Price elasticity of demand is 0.5, and the price of the good increases. Price elasticity of demand is 3.0, and the price of the good decreases.

A life-saving medicine without any close substitutes will tend to have

a small elasticity of demand

When demand is elastic, a decrease in price will cause

an increase in total revenue.

A perfectly elastic demand implies that

any rise in price above that represented by the demand curve will result in a quantity demanded of zero.

The price elasticity of demand measures

buyers' responsiveness to a change in the price of a good.

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

elastic, but not perfectly elastic.

Elasticity of demand is closely related to the slope of the demand curve. The more responsive buyers are to a change in price, the

flatter the demand curve will be.

Scenario 5-3The supply of aged cheddar cheese is inelastic, and the supply of bread is elastic. Both goods are considered to be normal goods by a majority of consumers. Suppose that a large income tax increase decreases the demand for both goods by 10%. Refer to Scenario 5-3. The change in equilibrium quantity will be

greater in the bread market than in the aged cheddar cheese market.

A linear, downward-sloping demand curve is

inelastic at some points, and elastic at others.

If sellers respond to very small changes in price by adjusting their quantity supplied by extremely large amounts, the price elasticity of supply approaches

infinity, and the supply curve is horizontal.

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

music downloads

Over time, technological advance increases consumers' incomes and reduces the price of smartphones. Each of these forces increases the amount consumers spend on smartphones if the income elasticity of demand is greater than _____ and if the price elasticity of demand is greater than _____.

one, zero

An increase in the supply of a good will decrease the total revenue producers receive if

the demand curve is inelastic.

Income elasticity of demand measures how

the quantity demanded changes as consumer income changes.

The ability of firms to enter and exit a market over time means that, in the long run,

the supply curve is more elastic.

A manufacturer produces 1,000 units, regardless of the market price. For this firm, the price elasticity of supply is

zero