79.
Price elasticity of demand is generally
D.
greater for “necessities” than it is for “luxuries.”
80.
Which of the following generalizations is not correct?
A. The larger an item is in one’s budget, the greater the price elasticity of demand.
81.
If price and total revenue vary in opposite directions, demand is
A.
perfectly inelastic.
6-42
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written consent of McGraw-Hill Education.
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
82.
The demand for a luxury good whose purchase would exhaust a big portion of one’s
income is
A.
perfectly price inelastic.
83.
The demand for a necessity whose cost is a small portion of one’s total income is
A.
perfectly price inelastic.
84.
The price elasticity of supply measures how
A. easily labor and capital can be substituted for one another in the production process.
6-43
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AACSB: Knowledge Application
Acc e s s i bi l i t y :
Keyboard Navigation
Blooms: Understand
Di f f i cu lt y :
02 Medium
Learning Objective: 06–04 Describe price elasticity of supply and how it can be applied.
Test Bank: I
Topic:
Price Elasticity of Supply
85.
The main determinant of elasticity of supply is the
86.
Suppose the supply of product X is perfectly inelastic. If there is an increase in the
demand for this product, equilibrium price
A.
will decrease, but equilibrium quantity will increase.
87.
Price
Quantity Supplied
$10
10
8
9
6
8
4
7
2
6
Refer to the table. Over the $6–$4 price range, supply is
A.
perfectly elastic.
88.
Price
Quantity Supplied
$10
10
8
9
6
8
4
7
2
6
Refer to the table. Over the $8–$6 price range, supply is
D.
perfectly elastic.
6-45
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Di f f i cu lt y :
02 Medium
Learning Objective: 06–04 Describe price elasticity of supply and how it can be applied.
Test Bank: I
Topic:
Price Elasticity of Supply
89.
Price
Quantity Supplied
$10
10
8
9
6
8
4
7
2
6
Refer to the table. Over the $10–$8 price range, the elasticity coefficient of supply is
A.
1.
90.
The supply of product X is elastic if the price of X rises by
D.
7 percent and quantity supplied rises by 5 percent.
6-46
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written consent of McGraw-Hill Education.
Test Bank: I
Topic:
Price Elasticity of Supply
91.
The supply of product X is inelastic (but not perfectly inelastic) if the price of X rises by
A.
5 percent and quantity supplied rises by 7 percent.
92.
The elasticity of supply of product X is unitary if the price of X rises by
93.
The supply of product X is perfectly inelastic if the price of X rises by
6-47
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Learning Objective: 06–04 Describe price elasticity of supply and how it can be applied.
Test Bank: I
Topic:
Price Elasticity of Supply
94.
The diagram shows two product supply curves. It indicates that
95.
It takes a considerable amount of time to increase the production of pork. This implies
that
6-48
96.
Suppose that the price of product X rises by 20 percent and the quantity supplied of X
increases by 15 percent. The coefficient of price elasticity of supply for good X is
97.
Refer to the diagram and assume that price increases from $2 to $10. The coefficient of the
price elasticity of supply (midpoint formula) relating to this price change is about
98.
Refer to the diagram and assume that price decreases from $10 to $2. The coefficient of the
price elasticity of supply (midpoint formula) relating to this price change is about
A.
4, and supply is elastic.
6-50
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written consent of McGraw-Hill Education.
Test Bank: I
Topic:
Price Elasticity of Supply
99.
The diagram concerns supply adjustments to an increase in demand (D1 to D2) in the
immediate market period, the short run, and the long run. Supply curves S1, S2, and S3 apply
to
the
100.
The diagram concerns supply adjustments to an increase in demand (D1 to D2) in the
immediate market period, the short run, and the long run. In the immediate market period, the
increase in demand will
101.
The diagram concerns supply adjustments to an increase in demand (D1 to D2) in the
immediate market period, the short run, and the long run. In the long run, the increase in
demand
will
102.
The diagram concerns supply adjustments to an increase in demand (D1 to D2) in the
immediate market period, the short run, and the long run. On the basis of this illustration, we
can
conclude that
103.
If the supply of product X is perfectly elastic, an increase in the demand for it will
increase
6-54
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written consent of McGraw-Hill Education.
Acc e s s i bi l i t y :
Keyboard Navigation
Blooms: Understand
Di f f i cu lt y :
02 Medium
Learning Objective: 06–04 Describe price elasticity of supply and how it can be applied.
Test Bank: I
Topic:
Price Elasticity of Supply
104.
Suppose the price of a product rises and the total revenue of sellers increases.
105.
Supply curves tend to be
106.
For an increase in demand, the price effect is smallest and the quantity effect is largest
6-55
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written consent of McGraw-Hill Education.
D.
in the immediate market period.
107.
A supply curve that is a vertical straight line indicates that
108.
A supply curve that is parallel to the horizontal axis suggests that
109.
An increase in demand will increase equilibrium price to a greater extent
A.
if the product is a normal good.
B.
if the product is an inferior good.
6-56
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written consent of McGraw-Hill Education.
C.
the less elastic the supply curve.
D. the more elastic the supply curve.
110.
The supply of known Monet paintings is
111.
Price per Ticket
Quantity Demanded
$13
1,000
11
2,000
9
3,000
7
4,000
5
5,000
3
6,000
Refer to the information and assume the stadium capacity is 5,000. If the Mudhens‘
management charges $7 per ticket,
6-57
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written consent of McGraw-Hill Education.
C.
there will be 1,000 empty seats.
D. the game will be sold out.
112.
Price per Ticket
Quantity Demanded
$13
1,000
11
2,000
9
3,000
7
4,000
5
5,000
3
6,000
Refer to the information and assume the stadium capacity is 5,000. The supply of seats for
the game
6-58
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written consent of McGraw-Hill Education.
Topic:
Price Elasticity of Supply
T o p i c :
The Total-Revenue Test
Type: Table
113.
Price per Ticket
Quantity Demanded
$13
1,000
11
2,000
9
3,000
7
4,000
5
5,000
3
6,000
Refer to the information and assume the stadium capacity is 5,000. If the Mudhens‘
management wanted a full house for the game, it would
114.
Price per Ticket
Quantity Demanded
$13
1,000
11
2,000
9
3,000
7
4,000
5
5,000
3
6,000
Refer to the information. Over the $11–$9 price range, demand is
115.
Price per Ticket
Quantity Demanded
$13
1,000
11
2,000
9
3,000
7
4,000
5
5,000
3
6,000
Refer to the information. Over the $9–$7 price range, demand is
6-60
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written consent of McGraw-Hill Education.
AACSB: Knowledge Application
Blooms: Understand
Di f f i cu lt y :
02 Medium
Learning Objective: 06-01 Discuss price elasticity of demand and how it is calculated.
Learning Objective: 06–03 List the factors that affect price elasticity of demand and
describe some applications of price elasticity of demand.
Learning Objective: 06–04 Describe price elasticity of supply and how it can be applied.
Test Bank: I
Topic:
Price Elasticity of Demand
T o p i c :
Price Elasticity of Supply
Type: Table
116.
Price per Ticket
Quantity Demanded
$13
1,000
11
2,000
9
3,000
7
4,000
5
5,000
3
6,000
Refer to the information. Over the $7–$5 price range, demand is
A.
perfectly elastic.