978-1259723223 Test Bank TBChap006 Part 2

43.

Suppose the total-revenue curve is derived from a particular linear demand curve. That

demand curve must be

44.

Suppose the total-revenue curve is derived from a particular linear demand curve. That

demand curve must be

45.

Which of the following statements is not correct?

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Blooms: Understand

Di f f i cu l t y :

02 Medium

Learning Objective: 06–02 Explain the usefulness of the total-revenue test for price

elasticity of demand.

Test Bank: I

Topic:

The Total-Revenue Test

46.

In which of the following instances will total revenue decline?

47.

If a firm’s demand for labor is elastic, a union-negotiated wage increase will

48.

The Illinois Central Railroad once asked the Illinois Commerce Commission for

permission to increase its commuter rates by 20 percent. The railroad argued that declining

revenues

made this rate increase essential. Opponents of the rate increase contended that

the railroad‘s revenues would fall because of the rate hike. It can be concluded that

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A.

both groups felt that the demand was elastic but for different reasons.

B.

both groups felt that the demand was inelastic but for different reasons.

C.

the railroad felt that the demand for passenger service was inelastic and opponents of the

rate increase felt it was elastic.

D. the railroad felt that the demand for passenger service was elastic and opponents of the

rate increase felt it was inelastic.

49.

If a firm finds that it can sell $13,000 worth of a product when its price is $5 per unit and

$11,000 worth of it when its price is $6, then

50.

Suppose the price elasticity of demand for bread is 0.20. If the price of bread falls by 10

percent, the quantity demanded will increase by

6-25

written consent of McGraw-Hill Education.

Di f f i cu l t y :

02 Medium

Learning Objective: 06–02 Explain the usefulness of the total-revenue test for price

elasticity of demand.

Test Bank: I

Topic:

The Total-Revenue Test

51.

Refer to the diagram, which is a rectangular hyperbola, that is, a curve such that each

52.

Refer to the diagram, which is a rectangular hyperbola, that is, a curve such that each

53.

Gigantic State University raises tuition for the purpose of increasing its revenue so that

more faculty can be hired. GSU is assuming that the demand for education at GSU is

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written consent of McGraw-Hill Education.

Blooms: Understand

Di f f i cu l t y :

02 Medium

Learning Objective: 06–02 Explain the usefulness of the total-revenue test for price

elasticity of demand.

Test Bank: I

Topic:

The Total-Revenue Test

54.

If the demand for farm products is price inelastic, a good harvest will cause farm

revenues to

55.

Other things the same, if a price change causes total revenue to change in the opposite

direction, demand is

56.

If the price elasticity of demand for a product is unity, a decrease in price will

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B.

increase the quantity demanded and increase total revenue.

C.

increase the quantity demanded but decrease total revenue.

D.

increase the quantity demanded, but total revenue will be unchanged.

57.

In which of the following cases will total revenue increase?

58.

A manufacturer of frozen pizzas found that total revenue decreased when price was

lowered from $5 to $4. It was also found that total revenue decreased when price was raised

from $5 to $6. Thus,

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Test Bank: I

Topic:

The Total-Revenue Test

59.

Refer to the diagram. In the P1P2 price range, demand is

60.

Refer to the diagram. In the P3P4 price range, demand is

61.

The total-revenue test for elasticity

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elasticity of demand.

Test Bank: I

Topic:

The Total-Revenue Test

62.

If the University Chamber Music Society decides to raise ticket prices to provide more

funds to finance concerts, the Society is assuming that the demand for tickets is

63.

The state legislature has cut Gigantic State University’s appropriations. GSU‘s Board of

Regents decides to increase tuition and fees to compensate for the loss of revenue. The board

is assuming that the

64.

Which of the following is correct?

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D. If demand is inelastic, an increase in price will decrease total revenue.

65.

Suppose that the price of peanuts falls from $3 to $2 per bushel and that, as a result, the

total revenue received by peanut farmers changes from $16 to $14 billion. Thus,

66.

Which of the following is correct?

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written consent of McGraw-Hill Education.

Test Bank: I

Topic:

The Total-Revenue Test

67.

Refer to the diagram. Total revenue at price P1 is indicated by area(s)

68.

Refer to the diagram. If price falls from P1 to P2, total revenue will become area(s)

69.

Refer to the diagram. The decline in price from P1 to P2 will

70.

Refer to the diagram. In the P1 to P2 price range, we can say

71.

Refer to the diagram. If price falls from $10 to $2, total revenue

72.

Refer to the diagram and assume that price increases from $2 to $10. The coefficient of price

73.

The demand schedules for such products as eggs, bread, and electricity tend to be

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Learning Objective: 06–03 List the factors that affect price elasticity of demand and

describe some applications of price elasticity of demand.

Test Bank: I

Topic:

Determinants of Price Elasticity of Demand

74.

The elasticity of demand for a product is likely to be greater,

75.

We would expect

76.

The narrower the definition of a product,

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C.

the larger the number of substitutes and the smaller the price elasticity of demand.

D.

the smaller the number of substitutes and the smaller the price elasticity of demand.

77.

The more time consumers have to adjust to a change in price,

78.

The demand for autos is likely to be