Question 1

The table below shows the quantities of automobiles,margarine,and coffee purchased by Ted at different levels of income. Table 5.2

- Refer to Table 5.2.What is the income elasticity of demand for automobiles?
A)0.5
B)0.35
C)2
D)0.2
E)Zero

Accepted Answer

The income elasticity of demand for automobiles is 0.5, which means that for every 1% increase in income, the demand for automobiles will increase by 0.5%.

Question 2

Arc elasticity is calculated as _____.
A)

B)

C)

D)

E)

Accepted Answer

The answer of Arc elasticity is calculated as _____.
A)

B)...

Question 3

Which of the following situations is represented by a nearly horizontal supply curve?
A)Small price changes lead to small changes in quantity demanded of the good.
B)Small price changes lead to small changes in quantity supplied of the good.
C)Producers of the good are not operating efficiently.
D)Producers of the good are not maximizing profit.
E)Small changes in the price of the good lead to large changes in the quantity supplied of the good.

Accepted Answer

A nearly horizontal supply curve indicates that the quantity supplied is highly responsive to price changes, meaning small changes in price lead to large changes in quantity supplied.

Question 4

The table below shows the quantities of automobiles,margarine,and coffee purchased by Ted at different levels of income. Table 5.2

- Based on the information given in Table 5.2,coffee would be considered:
A)an inferior good.
B)a necessity.
C)a normal good.
D)a negative good.
E)a luxury good.

Accepted Answer

Coffee is a normal good because its demand increases as income increases.

Question 5

The table given below reports the price and quantity demanded of a commodity. Table 5.1

- According to Table 5.1,when the price increases from $5 to $6,the price elasticity of demand is _____.
A)0.25
B)1.0
C)1.3
D)1.8
E)1.67

Accepted Answer

The price elasticity of demand is calculated using the formula: (percentage change in quantity demanded) / (percentage change in price). If the elasticity is given as 1.67, it means that for a 1% increase in price, the quantity demanded decreases by 1.67%.

Question 6

Which of the following statements correctly describe the elasticities of demand for gasoline and automobiles?
A)The income elasticity of demand for gasoline and automobiles is negative.
B)The price elasticity of demand for gasoline is elastic and the cross-price elasticity between gasoline and SUVs is positive.
C)The price elasticity of demand for gasoline is inelastic and the cross-price elasticity between gasoline and SUVs is negative.
D)The price elasticity of demand for gasoline is inelastic and the income elasticity between gasoline and SUVs is positive.
E)The price elasticity of demand for gasoline is elastic and the income elasticity between gasoline and SUVs is negative.

Accepted Answer

The price elasticity of demand for gasoline is generally inelastic because it is a necessity for most consumers and there are few good substitutes. The cross-price elasticity between gasoline and SUVs is likely negative because SUVs tend to be less fuel-efficient and require more gasoline, so as the price of gasoline increases, demand for SUVs may decrease. The income elasticity of demand for gasoline is also likely to be negative, as higher incomes may lead to consumers purchasing more fuel-efficient vehicles or reducing their overall gasoline consumption.

Question 7

If 12 candy bars are demanded at $0.30 each and 4 candy bars are demanded at $0.50 each,what is the elasticity of demand over the price range from $0.30 to $0.50?
A)2
B)1.67
C)0.5
D)7.5
E)0.4

Accepted Answer

The answer of If 12 candy bars are demanded at...

Question 8

Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2PS1U1B1xS1U1B0.Assume that P = $8,I = 200,and PS1U1B1x S1U1B0= $10.
-Given the above equation,the income elasticity of demand for noodles is _____.
A)5
B)0.5
C)2
D)2.5
E)1.6

Accepted Answer

The answer of Scenario 5.1 The demand for noodles is...

Question 9

When the supply elasticity of a product is 2.5,a 10 percent decrease in price will _____ the quantity supplied of the product by _____ percent.
A)increase; 25
B)decrease; 25
C)increase; 2.5
D)decrease; 2.5
E)decrease; 4

Accepted Answer

The answer of When the supply elasticity of a product...

Question 10

The income elasticity of demand _____.
A)must be negative because of the law of diminishing marginal utility
B)could be positive or negative or zero,depending on the nature of the good
C)must be positive because consumers tend to buy more at higher incomes
D)is usually zero because "you can only have so much"
E)can never be zero

Accepted Answer

The income elasticity of demand can be positive, negative, or zero, depending on the nature of the good. For example, luxury items like yachts and expensive cars tend to have a high income elasticity of demand (meaning demand for them rises as incomes rise), while necessities like food and basic clothing tend to have a low income elasticity of demand (meaning demand for them is relatively stable regardless of income level). Therefore, choice B is the best answer.

Question 11

A measure of the responsiveness of quantity supplied to changes in price is known as _____.
A)cross-price elasticity
B)price elasticity of demand
C)price elasticity of supply
D)income elasticity
E)point elasticity

Accepted Answer

The measure of the responsiveness of quantity supplied to changes in price is known as price elasticity of supply. Cross-price elasticity measures the responsiveness of the quantity of one good to changes in the price of another good, while income elasticity measures the responsiveness of quantity demanded or supplied to changes in income. Point elasticity is a specific calculation method for determining price elasticity at a single point on a demand or supply curve.

Question 12

Suppose the price of a product is reduced from $10 to $6 and the quantity demanded increases from 40 to 60 units.From this we can conclude that the price elasticity of demand over this price range is equal to _____.
A)1.2
B)1.25
C)0.80
D)0.20
E)0.5

Accepted Answer

The formula for price elasticity of demand is:

% change in quantity demanded / % change in price

Using the given information:

% change in quantity demanded = ((60-40)/40) x 100% = 50%

% change in price = ((10-6)/10) x 100% = 40%

Plugging in the values:

Price elasticity of demand = 50% / 40% = 1.25

Therefore, the best choice is B, 1.25.

Question 13

Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2PS1U1B1xS1U1B0.Assume that P = $8,I = 200,and PS1U1B1xS1U1B0S1U1B1 S1U1B0= $10.
-Given the above equation,the price elasticity of demand for noodles is _____.
A)4
B)0.5
C)2
D)2.5
E)1.6

Accepted Answer

The answer of Scenario 5.1 The demand for noodles is...

Question 14

Which of the following items is likely to have the highest positive income elasticity of demand?
A)Bread
B)Jewelry
C)Soap
D)A plumber's service
E)Table salt

Accepted Answer

Items such as jewelry are considered luxury goods, meaning that they are not essential for survival and their demand increases as income increases. Therefore, jewelry is likely to have a higher income elasticity of demand compared to necessities such as bread, soap, and table salt. A plumber's service is a service rather than a good, but it is also likely to have a relatively low income elasticity of demand as it is more of a necessity than a luxury.

Question 15

Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2PS1U1B1xS1U1B0.Assume that P = $8,I = 200,and PS1U1B1x S1U1B0= $10.
-Given the above equation,the quantity of noodles demanded at a price of $8 is _____.
A)8
B)10
C)12
D)4
E)20

Accepted Answer

The answer of Scenario 5.1 The demand for noodles is...

Question 16

Acme Tools manufactures anvils,a forging tool.When the price of anvils was increased from $7 to $13,Acme Tools was willing and able to increase production from 1 to 4 units per day.Using the midpoint formula,what is Acme's price elasticity of supply for anvils?
A)2
B)1
C)0.5
D)4
E)3.5

Accepted Answer

The price elasticity of supply is calculated using the midpoint formula: [(Q2 - Q1) / ((Q2 + Q1) / 2)] / [(P2 - P1) / ((P2 + P1) / 2)]. Substituting the given values: [(4 - 1) / ((4 + 1) / 2)] / [($13 - $7) / (($13 + $7) / 2)] = 3 / 2.5 / 6 / 10 = 3 / 1.5 = 2.

Question 17

There are some special types of goods for which supply cannot change irrespective of the length of time allowed for change,such as Beethoven symphonies.The price elasticity of supply for these goods is _____.
A)infinite
B)nonexistent
C)negative
D)zero
E)unity

Accepted Answer

The price elasticity of supply for goods such as Beethoven symphonies is zero because the supply cannot change regardless of the price. This is because they are unique and cannot be easily replicated or reproduced.

Question 18

When income elasticity of demand is a negative number,one can correctly conclude that:
A)the good is a normal good.
B)the good is an inferior good.
C)the good is a substitute.
D)the good is a complement.
E)total revenue will decrease when the price increases.

Accepted Answer

A negative income elasticity of demand indicates that as income increases, the quantity demanded of the good decreases. This is a characteristic of inferior goods, which are goods that consumers demand less of as their incomes rise.

Question 19

Price elasticity of demand measured over a range of prices and quantities along the demand curve is _____.
A)point elasticity
B)arc elasticity
C)income elasticity
D)cross elasticity
E)price elasticity

Accepted Answer

The range of prices and quantities along the demand curve is called an arc. Therefore, measuring the price elasticity of demand over this range is called arc elasticity.

Question 20

The table below shows the quantities of automobiles,margarine,and coffee purchased by Ted at different levels of income. Table 5.2
 
-Based on the information given in Table 5.2,margarine is:
A)an inferior good.
B)a necessity.
C)a normal good.
D)a complementary good.
E)a luxury good.

Accepted Answer

As income increases, Ted purchases less margarine. This is a characteristic of inferior goods, which people buy less of as their income increases and can afford higher-quality substitutes.

Quiz 5: Elasticity: Demand and Supply

The table below shows the quantities of automobiles,margarine,and coffee purchased by Ted at different levels of income. Table 5.2 - Refer to Table 5.2.What is the income elasticity of demand for automobiles?

Arc elasticity is calculated as _____.

Which of the following situations is represented by a nearly horizontal supply curve?

The table below shows the quantities of automobiles,margarine,and coffee purchased by Ted at different levels of income. Table 5.2 - Based on the information given in Table 5.2,coffee would be considered:

The table given below reports the price and quantity demanded of a commodity. Table 5.1 - According to Table 5.1,when the price increases from $5 to $6,the price elasticity of demand is _____.

Which of the following statements correctly describe the elasticities of demand for gasoline and automobiles?

If 12 candy bars are demanded at $0.30 each and 4 candy bars are demanded at $0.50 each,what is the elasticity of demand over the price range from $0.30 to $0.50?

Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x.Assume that P = $8,I = 200,and P_x= $10. -Given the above equation,the income elasticity of demand for noodles is _____.

When the supply elasticity of a product is 2.5,a 10 percent decrease in price will _ the quantity supplied of the product by _ percent.

The income elasticity of demand _____.

A measure of the responsiveness of quantity supplied to changes in price is known as _____.

Suppose the price of a product is reduced from $10 to $6 and the quantity demanded increases from 40 to 60 units.From this we can conclude that the price elasticity of demand over this price range is equal to _____.

Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x.Assume that P = $8,I = 200,and P_x= $10. -Given the above equation,the price elasticity of demand for noodles is _____.

Which of the following items is likely to have the highest positive income elasticity of demand?

Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x.Assume that P = $8,I = 200,and P_x= $10. -Given the above equation,the quantity of noodles demanded at a price of $8 is _____.

Acme Tools manufactures anvils,a forging tool.When the price of anvils was increased from $7 to $13,Acme Tools was willing and able to increase production from 1 to 4 units per day.Using the midpoint formula,what is Acme's price elasticity of supply for anvils?

There are some special types of goods for which supply cannot change irrespective of the length of time allowed for change,such as Beethoven symphonies.The price elasticity of supply for these goods is _____.

When income elasticity of demand is a negative number,one can correctly conclude that:

Price elasticity of demand measured over a range of prices and quantities along the demand curve is _____.

The table below shows the quantities of automobiles,margarine,and coffee purchased by Ted at different levels of income. Table 5.2 -Based on the information given in Table 5.2,margarine is:

Quiz 5: Elasticity: Demand and Supply

The table below shows the quantities of automobiles,margarine,and coffee purchased by Ted at different levels of income. Table 5.2 - Refer to Table 5.2.What is the income elasticity of demand for automobiles?

Arc elasticity is calculated as _____.

Which of the following situations is represented by a nearly horizontal supply curve?

The table below shows the quantities of automobiles,margarine,and coffee purchased by Ted at different levels of income. Table 5.2 - Based on the information given in Table 5.2,coffee would be considered:

The table given below reports the price and quantity demanded of a commodity. Table 5.1 - According to Table 5.1,when the price increases from $5 to $6,the price elasticity of demand is _____.

Which of the following statements correctly describe the elasticities of demand for gasoline and automobiles?

If 12 candy bars are demanded at $0.30 each and 4 candy bars are demanded at $0.50 each,what is the elasticity of demand over the price range from $0.30 to $0.50?

Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2Px.Assume that P = $8,I = 200,and Px = $10. -Given the above equation,the income elasticity of demand for noodles is _____.

When the supply elasticity of a product is 2.5,a 10 percent decrease in price will _____ the quantity supplied of the product by _____ percent.

The income elasticity of demand _____.

A measure of the responsiveness of quantity supplied to changes in price is known as _____.

Suppose the price of a product is reduced from $10 to $6 and the quantity demanded increases from 40 to 60 units.From this we can conclude that the price elasticity of demand over this price range is equal to _____.

Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2Px.Assume that P = $8,I = 200,and Px = $10. -Given the above equation,the price elasticity of demand for noodles is _____.

Which of the following items is likely to have the highest positive income elasticity of demand?

Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2Px.Assume that P = $8,I = 200,and Px = $10. -Given the above equation,the quantity of noodles demanded at a price of $8 is _____.

Acme Tools manufactures anvils,a forging tool.When the price of anvils was increased from $7 to $13,Acme Tools was willing and able to increase production from 1 to 4 units per day.Using the midpoint formula,what is Acme's price elasticity of supply for anvils?

There are some special types of goods for which supply cannot change irrespective of the length of time allowed for change,such as Beethoven symphonies.The price elasticity of supply for these goods is _____.

When income elasticity of demand is a negative number,one can correctly conclude that:

Price elasticity of demand measured over a range of prices and quantities along the demand curve is _____.

The table below shows the quantities of automobiles,margarine,and coffee purchased by Ted at different levels of income. Table 5.2 -Based on the information given in Table 5.2,margarine is:

Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x.Assume that P = $8,I = 200,and P_x= $10. -Given the above equation,the income elasticity of demand for noodles is _____.

When the supply elasticity of a product is 2.5,a 10 percent decrease in price will _ the quantity supplied of the product by _ percent.

Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x.Assume that P = $8,I = 200,and P_x= $10. -Given the above equation,the price elasticity of demand for noodles is _____.

Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x.Assume that P = $8,I = 200,and P_x= $10. -Given the above equation,the quantity of noodles demanded at a price of $8 is _____.