Question 1

)  Which of the following is not true in the range of the total revenue curvelabeled A in Exhibit 5­8?
A)Demand is inelastic.
B)Total revenue is increasing.
C)Total revenue is positive.
D)Demand is elastic.
E)Demand elasticity decreases as total revenue increases.

Accepted Answer

The answer of )  Which of the following is...

Question 2

We can tell that demand is elastic as price falls between point a and point bin Exhibit 5­6 because
A)quantity demanded is increasing
B)total revenue is increasing
C)total revenue is decreasing
D)total revenue is unchanged
E)the demand curve slopes downward

Accepted Answer

The answer of  We can tell that demand is...

Question 3

If the sellers in the cigarette industry formed a cartel and decided to setprice along a straight­line downward­sloping demand curve, which pointwould they choose if they wanted to gain the highest total revenue?
A)The point nearest the vertical axis, where the price is highest.
B)The point nearest the horizontal axis, where quantity demanded is greatest.
C)One of the points higher up on the demand curve, where demand is elastic.
D)One of the points lower down on the demand curve, where demand is inelastic.
E)The point of unit elasticity, in the middle of the demand curve.

Accepted Answer

The answer of If the sellers in the cigarette industry...

Question 4

)  Refer to Exhibit 5­11.What can be said of the price elasticity of demand forthis good?
A)Demand is inelastic.
B)Demand is unit elastic.
C)Demand is elastic.
D)Demand is perfectly elastic.
E)Not enough information is given to determine elasticity.

Accepted Answer

The slope of the demand curve indicates that a 1% increase in price results in a greater than 1% decrease in quantity demanded. This suggests that demand is elastic, meaning that consumers are highly responsive to changes in price.

Question 5

)  Between points b and c in Exhibit 5­7, price decreases by $1, quantitydemanded increases by 10,
A)total revenue decreases by $1, and demand is elastic
B)total revenue decreases by $1, and demand is inelastic
C)total revenue increases by $40, and demand is elastic
D)total revenue increases by $40, and demand is inelastic
E)and total revenue increases by $80

Accepted Answer

The answer of )  Between points b and c...

Question 6

Exhibit 5­7  Which of the following is true between points g and h in Exhibit 5­7?
A)Total revenue remains constant at $180.
B)Total revenue falls by $12.
C)Total revenue falls by $60.
D)Total revenue falls by $180.
E)Demand is elastic.

Accepted Answer

The answer of Exhibit 5­7  Which of the following...

Question 7

In Exhibit 5­10, between the two equilibrium prices shown, demand is
A)price elastic
B)price inelastic
C)unit elastic
D)perfectly elastic
E)perfectly inelastic

Accepted Answer

The answer of  In Exhibit 5­10, between the two...

Question 8

Along a downward­sloping linear demand curve,
A)slope is constant and elasticity is changing
B)slope is changing and elasticity is constant
C)both slope and elasticity are constant
D)both slope and elasticity are changing
E)no generalizations can be made about slope

Accepted Answer

The answer of Along a downward­sloping linear demand curve,
A)slope is...

Question 9

Along a linear demand curve, total revenue is maximized when demand is
A)elastic
B)inelastic
C)unit elastic
D)perfectly elastic
E)perfectly inelastic

Accepted Answer

Total revenue is maximized at the point where marginal revenue (the additional revenue gained from selling one more unit) is equal to zero. Along a linear demand curve, this occurs at the point of unit elasticity, where the price elasticity of demand is equal to -1. At this point, a price increase will lead to a proportional decrease in quantity demanded, leaving total revenue unchanged. Similarly, a price decrease will lead to a proportional increase in quantity demanded, also leaving total revenue unchanged. Therefore, total revenue is maximized at the point of unit elasticity.

Question 10

)  Which of the following statements is true in the range of the total revenuecurve labeled B in Exhibit 5­8?
A)Demand is elastic.
B)Demand is inelastic.
C)Demand is unit elastic.
D)We cannot tell anything about elasticity of demand because this is a total revenue curve.
E)Demand is perfectly elastic.

Accepted Answer

In the range of the total revenue curve labeled B, the slope of the curve is negative, indicating that the price elasticity of demand is less than one. This means that demand is inelastic in this range, as changes in price have a relatively small effect on the quantity demanded.

Question 11

Dusty Rags, Inc.provides janitorial services to retail stores.Dusty had beencharging $10 per hour and selling 400 hours of service per week at that rate.When he raised his price to $15 per hour, his customers cut back to 300weekly hours of service.Which of the following is true?
A)Revenue went from $4,000 per week to $4,500 per week, indicating that the demand curve for his services
Must have shifted to the right.
B)Revenue went from $4,000 per week to $4,500 per week, indicating that the demand for his services must
Be elastic.
C)Revenue went from $4,000 per week to $4,500 per week, indicating that the demand for his services must
Be inelastic.
D)Revenue went from $400 to $300 per week, indicating that demand must be elastic.
E)Revenue went from $10 to $15 per week, indicating that demand must be inelastic.

Accepted Answer

When Dusty raised the price from $10 to $15 per hour, the quantity demanded decreased from 400 hours per week to 300 hours per week. However, the increase in price resulted in an increase in revenue from $4,000 per week to $4,500 per week. This indicates that the demand for his services is inelastic, meaning that customers are willing to pay more for the service and are not very sensitive to changes in price. If the demand were elastic, an increase in price would lead to a much larger decrease in quantity demanded and the total revenue would decrease.

Question 12

Along a linear demand curve, as the price rises, demand becomes more
A)steep
B)elastic
C)inelastic
D)unit elastic
E)variable

Accepted Answer

The answer of Along a linear demand curve, as the...

Question 13

Along a straight­line downward­sloping demand curve, elasticity is
A)constant, but its value cannot be determined without measurement
B)constant and equal to an absolute value of one
C)greater at higher prices
D)greater at lower prices
E)greater in the middle

Accepted Answer

The answer of Along a straight­line downward­sloping demand curve, elasticity...

Question 14

The total revenue curve that corresponds to a downward­sloping lineardemand curve
A)slopes downward
B)slopes upward
C)is a horizontal line
D)first rises, then falls
E)first falls, then rises

Accepted Answer

The total revenue curve first rises then falls with a downward-sloping linear demand curve. This is because when the price is high (at the left end of the curve), the quantity demanded is low, so the total revenue is also low. As the price decreases (moving to the right along the curve), the quantity demanded increases, thereby increasing the total revenue. However, at a certain point, the decrease in price will lead to a decrease in revenue since the increase in quantity demanded will not be enough to offset the decrease in price. Therefore, the total revenue curve first rises, reaches its maximum point, and then falls.

Question 15

Along a downward­sloping linear demand curve, total revenue is greatest ifdemand is
A)inelastic
B)elastic
C)inelastic when prices are high
D)elastic when prices are high
E)unit elastic

Accepted Answer

The answer of Along a downward­sloping linear demand curve, total...

Question 16

It has been suggested that if NHL hockey teams would lower ticket prices,they could increase revenue from ticket sales.Which of the followingassumptions forms the basis for this suggestion?
A)Both d and e are correct.
B)All of the following are correct.
C)Demand for NHL hockey is income inelastic.
D)Demand for NHL hockey is price elastic.
E)There are many substitutes for NHL hockey.

Accepted Answer

The answer of It has been suggested that if NHL...

Question 17

)  In Exhibit 5­7, demand is unit elastic
A)between points a and d
B)between points d and e
C)between points e and g
D)only at the top and bottom of the curve
E)anywhere along the curve

Accepted Answer

Demand is unit elastic where the price elasticity of demand is equal to 1. We can see from Exhibit 5-7 that the slope of the demand curve is steepest at point c and flattens as we move towards point g. Therefore, the elasticity of demand increases as we move from point c towards point g. Demand is unit elastic between points d and e, where the slope of the demand curve is neither too steep nor too flat, and the price elasticity of demand is equal to 1.

Question 18

In Exhibit 5­8, which of the following statements is true at a quantity of 10?
A)Demand is elastic.
B)Demand is inelastic.
C)Demand is unit elastic.
D)We cannot tell anything about elasticity of demand because this is a total revenue curve.
E)Demand is perfectly elastic.

Accepted Answer

The answer of  In Exhibit 5­8, which of the...

Question 19

Suppose consumers spent $42 million on Christmas trees last year when theaverage tree cost $30 and this year spent $42 million when the average treecosts $25.Assuming nothing else changed, this data suggests that
A)consumers bought the same number of Christmas trees this year as last year
B)the price of Christmas trees stayed the same
C)total revenues to tree producers rose this year
D)the demand for trees is unit elastic
E)the demand for trees is inelastic

Accepted Answer

The answer of Suppose consumers spent $42 million on Christmas...

Question 20

Exhibit 5­9  Between points a and b on the demand curve in Exhibit 5­9, demand is
A)perfectly elastic
B)elastic
C)perfectly inelastic
D)inelastic
E)unit elastic

Accepted Answer

The answer of Exhibit 5­9  Between points a and...

Quiz 5: Elasticity of Demand and Supply

) Which of the following is not true in the range of the total revenue curvelabeled A in Exhibit 58?

We can tell that demand is elastic as price falls between point a and point bin Exhibit 56 because

If the sellers in the cigarette industry formed a cartel and decided to setprice along a straightline downwardsloping demand curve, which pointwould they choose if they wanted to gain the highest total revenue?

) Refer to Exhibit 511.What can be said of the price elasticity of demand forthis good?

) Between points b and c in Exhibit 57, price decreases by $1, quantitydemanded increases by 10,

Exhibit 57 Which of the following is true between points g and h in Exhibit 57?

In Exhibit 510, between the two equilibrium prices shown, demand is

Along a downwardsloping linear demand curve,

Along a linear demand curve, total revenue is maximized when demand is

) Which of the following statements is true in the range of the total revenuecurve labeled B in Exhibit 58?

Dusty Rags, Inc.provides janitorial services to retail stores.Dusty had beencharging $10 per hour and selling 400 hours of service per week at that rate.When he raised his price to $15 per hour, his customers cut back to 300weekly hours of service.Which of the following is true?

Along a linear demand curve, as the price rises, demand becomes more

Along a straightline downwardsloping demand curve, elasticity is

The total revenue curve that corresponds to a downwardsloping lineardemand curve

Along a downwardsloping linear demand curve, total revenue is greatest ifdemand is

It has been suggested that if NHL hockey teams would lower ticket prices,they could increase revenue from ticket sales.Which of the followingassumptions forms the basis for this suggestion?

) In Exhibit 57, demand is unit elastic

In Exhibit 58, which of the following statements is true at a quantity of 10?

Suppose consumers spent $42 million on Christmas trees last year when theaverage tree cost $30 and this year spent $42 million when the average treecosts $25.Assuming nothing else changed, this data suggests that

Exhibit 59 Between points a and b on the demand curve in Exhibit 59, demand is

Quiz 5: Elasticity of Demand and Supply

) Which of the following is not true in the range of the total revenue curvelabeled A in Exhibit 5­8?

We can tell that demand is elastic as price falls between point a and point bin Exhibit 5­6 because

If the sellers in the cigarette industry formed a cartel and decided to setprice along a straight­line downward­sloping demand curve, which pointwould they choose if they wanted to gain the highest total revenue?

) Refer to Exhibit 5­11.What can be said of the price elasticity of demand forthis good?

) Between points b and c in Exhibit 5­7, price decreases by $1, quantitydemanded increases by 10,

Exhibit 5­7 Which of the following is true between points g and h in Exhibit 5­7?

In Exhibit 5­10, between the two equilibrium prices shown, demand is

Along a downward­sloping linear demand curve,