Question 1

-The above figure shows the demand curve for movie rentals from Redbox. Which of the following is TRUE?
A) Consumer expenditure on movie rentals will always increase whenever Redbox lowers its price.
B) Redbox will receive more total revenue if it charges $4.00 per movie rental rather than $3.00.
C) The price elasticity of demand for movie rentals falls as Redbox raises its price.
D) The demand for movie rentals is more price inelastic at $1.00 than it is at $1.50.

Accepted Answer

The answer of 
-The above figure shows the demand curve...

Question 2

-The above figure shows the demand curve for movie rentals from Redbox. At which of the following prices does Redbox have the maximum total revenue?
A) $5.00
B) $3.50
C) $2.50
D) $0.00

Accepted Answer

The answer of 
-The above figure shows the demand curve...

Question 3

In the summer 2012 the lobster catch in Maine was especially large, but instead of celebrating the fisherman were suffering from a lower total revenue. (Source: New York Times, July 28, 2012) As the lobster catch increases, there is
A) a movement along the demand curve, resulting in a higher price and a decreased quantity.
B) a movement along the demand curve, resulting in a lower price and an increased quantity.
C) no change in either the price or the quantity.
D) a movement along the demand curve, resulting in a higher price and an increased quantity.

Accepted Answer

As the lobster catch increases, the supply increases, leading to a movement along the demand curve with a lower price and an increased quantity sold.

Question 4

Total revenue for skis is at a maximum when the price elasticity of demand is
A) between 0 and 1.
B) 1.
C) greater than 1.
D) 0.

Accepted Answer

Total revenue is maximized when the price elasticity of demand is equal to 1, meaning demand is unit elastic.

Question 5

The price of milk rises, so the supply of ice cream decreases. there is, as a result a 5 percent increase in the price of ice cream and a 3 percent decrease in the quantity of ice cream sold. The revenue received by ice cream suppliers will ________ because the demand for ice cream is ________.
A) decrease; price inelastic
B) increase; price inelastic
C) increase; price elastic
D) decrease; price elastic

Accepted Answer

The revenue will increase because the percentage increase in price (5%) is greater than the percentage decrease in quantity sold (3%), indicating that demand is price inelastic.

Question 6

Suppose that the demand for corn is price inelastic. If a technological advance makes corn farms more productive, the equilibrium price of corn will ________ and the farmers' total revenue will ________.
A) rise; increase
B) rise; decrease
C) fall; increase
D) fall; decrease

Accepted Answer

When demand is price inelastic, a decrease in price leads to a decrease in total revenue. A technological advance increases supply, causing the equilibrium price to fall, which decreases total revenue for inelastic demand.

Question 7

A shift of the supply curve of oil raises the price from $70 a barrel to $80 a barrel and reduces the quantity demanded from 40 million to 38 million barrels a day. You can conclude that the
A) demand for oil is elastic.
B) demand for oil is inelastic.
C) supply of oil is elastic.
D) supply of oil is inelastic.

Accepted Answer

The increase in price from $70 to $80 leads to only a small decrease in quantity demanded from 40 million to 38 million barrels, indicating that the demand for oil is inelastic.

Question 8

Sara's Strawberry Market maximizes its total revenue by selling strawberries for $1.25 a basket. At a price of $1.25, you predict that
A) the demand for strawberries is inelastic.
B) Sara's sells most of the strawberries that she grows.
C) the demand for strawberries is elastic.
D) the demand for strawberries is unit elastic.

Accepted Answer

When total revenue is maximized, the demand is unit elastic, meaning the percentage change in quantity demanded is equal to the percentage change in price.

Question 9

-The above table gives the demand schedule for Billy Bob's BBQ ribs. The demand for Billy Bob's ribs over the price range of $1 per pound to $3 per pound is
A) perfectly elastic.
B) elastic.
C) unit elastic.
D) inelastic.

Accepted Answer

The answer of 
-The above table gives the demand schedule...

Question 10

When the price of a Caesar salad is $5.00, the demand for Caesar salads is elastic, and when the price is $4.00, the demand is inelastic. If Mike's Roadside Restaurant cuts the price from $5.00 to $4.00, its total revenue from Caesar salads
A) will increase.
B) will decrease.
C) will remain the same.
D) might increase, decrease, or remain the same.

Accepted Answer

The answer of When the price of a Caesar salad...

Question 11

-The above table gives the demand schedule for Billy Bob's BBQ ribs. The price elasticity of demand for Billy Bob's ribs over the price range of $3 to $1 is equal to
A) 4.00.
B) 2.00.
C) 0.50.
D) 0.25.

Accepted Answer

The answer of 
-The above table gives the demand schedule...

Question 12

-The above figure shows the demand curve for movie rentals from Redbox. At which of the following prices is the demand unit elastic?
A) $5.00
B) $3.50
C) $2.50
D) $0.00

Accepted Answer

The answer of 
-The above figure shows the demand curve...

Question 13

In the summer 2012 the lobster catch in Maine was especially large, but instead of celebrating the fisherman were suffering from a lower total revenue. (Source: New York Times, July 28, 2012) Despite the larger quantity of lobster caught, the total revenue of the fisherman decreased. This fact means that the demand for lobster is
A) unit elastic.
B) elastic.
C) inelastic.
D) perfectly elastic.

Accepted Answer

The answer of In the summer 2012 the lobster catch...

Question 14

-The above table gives the demand schedule for Billy Bob's BBQ ribs. If the price of a pound of ribs falls from $3 per pound to $1 per pound, what is the change in Billy Bob's total revenue?
A) $42
B) $24
C) -$2
D) -$24

Accepted Answer

The answer of 
-The above table gives the demand schedule...

Question 15

A shift of the supply curve of oil raises the price from $60 a barrel to $75 a barrel and reduces the quantity demanded from 40 million to 20 million barrels a day. You can conclude that the
A) demand for oil is elastic.
B) demand for oil is inelastic.
C) supply of oil is elastic.
D) supply of oil is inelastic.

Accepted Answer

The demand for oil is elastic because the percentage change in quantity demanded (50%) is greater than the percentage change in price (25%).

Question 16

-The above table gives the demand schedule for Billy Bob's BBQ ribs. The demand for Billy Bob's ribs is unit elastic at which of the following prices?
A) $10
B) $7
C) $5
D) $1

Accepted Answer

Unit elastic demand occurs when the percentage change in quantity demanded is equal to the percentage change in price. This typically happens at the midpoint of a linear demand curve. Without the specific demand schedule, $5 is often a common midpoint price in such scenarios.

Question 17

-The above table gives the demand schedule for Billy Bob's BBQ ribs. An increase in the price of a pound of ribs will lead to a decrease in total revenue when
A) demand is inelastic.
B) the demand curve is vertical.
C) the price increase occurs over the price range of 0 to $5.
D) the price increase occurs over the price range of $5 to $10.

Accepted Answer

When the price increase occurs over the price range of $5 to $10, demand is likely elastic, meaning that the percentage decrease in quantity demanded is greater than the percentage increase in price, leading to a decrease in total revenue.

Question 18

-The above figure shows the demand curve for movie rentals from Redbox. If Redbox raised its price from $2.50 to $3.00, between these two prices the price elasticity of demand equals
A) 1.2.
B) 0.8.
C) 2.0.
D) 0.5.

Accepted Answer

The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. If the elasticity is greater than 1, demand is elastic; if it is less than 1, demand is inelastic. An elasticity of 1.2 indicates that the demand is elastic between these two prices.

Question 19

If hot dog vendors at baseball games want to maximize their total sales revenue, they will have to
A) be willing to experience reduced hot dog expenditure by baseball fans.
B) set the price of their hot dogs so that the demand is unit elastic.
C) sell as many hot dogs as they can, even if it means lowering price.
D) raise their price, even if it means selling fewer hot dogs.

Accepted Answer

Setting the price so that demand is unit elastic means that the percentage change in quantity demanded is equal to the percentage change in price, maximizing total revenue.

Question 20

-The above figure shows the demand curve for movie rentals from Redbox. If Redbox lowered its price from $4.00 to $3.50, then total revenue would ________ because demand is ________.
A) decrease; elastic
B) increase; elastic
C) decrease; inelastic
D) increase; inelastic

Accepted Answer

When demand is elastic, a decrease in price leads to an increase in total revenue because the percentage increase in quantity demanded is greater than the percentage decrease in price.

Quiz 4: Elasticity

-The above figure shows the demand curve for movie rentals from Redbox. Which of the following is TRUE?

-The above figure shows the demand curve for movie rentals from Redbox. At which of the following prices does Redbox have the maximum total revenue?

In the summer 2012 the lobster catch in Maine was especially large, but instead of celebrating the fisherman were suffering from a lower total revenue. (Source: New York Times, July 28, 2012) As the lobster catch increases, there is

Total revenue for skis is at a maximum when the price elasticity of demand is

The price of milk rises, so the supply of ice cream decreases. there is, as a result a 5 percent increase in the price of ice cream and a 3 percent decrease in the quantity of ice cream sold. The revenue received by ice cream suppliers will because the demand for ice cream is .

Suppose that the demand for corn is price inelastic. If a technological advance makes corn farms more productive, the equilibrium price of corn will and the farmers' total revenue will .

A shift of the supply curve of oil raises the price from $70 a barrel to $80 a barrel and reduces the quantity demanded from 40 million to 38 million barrels a day. You can conclude that the

Sara's Strawberry Market maximizes its total revenue by selling strawberries for $1.25 a basket. At a price of $1.25, you predict that

-The above table gives the demand schedule for Billy Bob's BBQ ribs. The demand for Billy Bob's ribs over the price range of $1 per pound to $3 per pound is

When the price of a Caesar salad is $5.00, the demand for Caesar salads is elastic, and when the price is $4.00, the demand is inelastic. If Mike's Roadside Restaurant cuts the price from $5.00 to $4.00, its total revenue from Caesar salads

-The above table gives the demand schedule for Billy Bob's BBQ ribs. The price elasticity of demand for Billy Bob's ribs over the price range of $3 to $1 is equal to

-The above figure shows the demand curve for movie rentals from Redbox. At which of the following prices is the demand unit elastic?

-The above table gives the demand schedule for Billy Bob's BBQ ribs. If the price of a pound of ribs falls from $3 per pound to $1 per pound, what is the change in Billy Bob's total revenue?

A shift of the supply curve of oil raises the price from $60 a barrel to $75 a barrel and reduces the quantity demanded from 40 million to 20 million barrels a day. You can conclude that the

-The above table gives the demand schedule for Billy Bob's BBQ ribs. The demand for Billy Bob's ribs is unit elastic at which of the following prices?

-The above table gives the demand schedule for Billy Bob's BBQ ribs. An increase in the price of a pound of ribs will lead to a decrease in total revenue when

-The above figure shows the demand curve for movie rentals from Redbox. If Redbox raised its price from $2.50 to $3.00, between these two prices the price elasticity of demand equals

If hot dog vendors at baseball games want to maximize their total sales revenue, they will have to

-The above figure shows the demand curve for movie rentals from Redbox. If Redbox lowered its price from $4.00 to $3.50, then total revenue would because demand is .