Question 1

Figure 5-4 
-Refer to Figure 5-4. Assume the section of the demand curve from A to B corresponds to prices between $8 and $16. Then, when the price changes between $9 and $10,
A) quantity demanded changes proportionately less than the price.
B) quantity demanded changes proportionately more than the price.
C) quantity demanded changes the same amount proportionately as price.
D) the price elasticity of demand equals 1.

Accepted Answer

According to the law of demand, as the price of a good increases, the quantity demanded decreases. However, the degree to which quantity demanded changes in response to a change in price can vary. This is measured by price elasticity of demand. In this case, the section of the demand curve from A to B is relatively steep, indicating that the price elasticity of demand is high. This means that a small change in price (from $9 to $10) will result in a relatively large change in quantity demanded, indicating that quantity demanded changes proportionately more than the price. Therefore, the best choice is B.

Question 2

Figure 5-4 
-Refer to Figure 5-4. If the price increases in the region of the demand curve between points B and C, we can expect total revenue to
A) increase.
B) stay the same.
C) decrease.
D) first decrease, then increase until total revenue is maximized.

Accepted Answer

This is the area of the demand curve where price elasticity of demand is high. As price increases, quantity demanded decreases significantly, causing total revenue to decrease. Therefore, we can expect total revenue to decrease if the price increases in this region of the demand curve between B and C.

Question 3

Figure 5-5 
-Refer to Figure 5-5. At a price of $70 per unit, sellers' total revenue equals
A) $700.
B) $1050.
C) $1250.
D) $1400.

Accepted Answer

The answer of Figure 5-5 
-Refer to Figure 5-5. At...

Question 4

Figure 5-4 
-Refer to Figure 5-4. Assume the section of the demand curve from B to C corresponds to prices between $0 and $15. Then, when the price changes between $7 and $9,
A) quantity demanded changes proportionately less than the price.
B) quantity demanded changes proportionately more than the price.
C) quantity demanded changes the same amount proportionately as price.
D) the price elasticity of demand equals zero.

Accepted Answer

The answer of Figure 5-4 
-Refer to Figure 5-4. Assume...

Question 5

Figure 5-5 
-Refer to Figure 5-5. Using the midpoint method, between prices of $50 and $60, price elasticity of demand is about
A) 0.22.
B) 0.82.
C) 1.22.
D) 2.

Accepted Answer

The answer of Figure 5-5 
-Refer to Figure 5-5. Using...

Question 6

Figure 5-5 
-Refer to Figure 5-5. Using the midpoint method, demand is unit elastic between prices of
A) $20 and $40.
B) $40 and$50.
C) $40 and$60.
D) $50 and$70.

Accepted Answer

The midpoint between $40 and $60 is ($40+$60)/2 = $50, which is the point of unit elasticity. Therefore, demand is unit elastic between prices of $40 and $60.

Question 7

Figure 5-5 
-Refer to Figure 5-5. The maximum value of total revenue corresponds to a price of
A) $20.
B) $50.
C) $70
D) $100.

Accepted Answer

The maximum value of total revenue occurs at the midpoint of the demand curve, which typically corresponds to the price where elasticity is unitary. In this context, it is given as $50.

Question 8

Figure 5-5 
-Refer to Figure 5-5. Using the midpoint method, between prices of $20 and $30, price elasticity of demand is about
A) 0.33.
B) 0.4.
C) 1.33.
D) 3.

Accepted Answer

The answer of Figure 5-5 
-Refer to Figure 5-5. Using...

Question 9

Figure 5-5 
-Refer to Figure 5-5. Using the midpoint method, between prices of $70 and $80, price elasticity of demand is
A) 0.33.
B) 0.4.
C) 1.33.
D) 3.

Accepted Answer

The answer of Figure 5-5 
-Refer to Figure 5-5. Using...

Question 10

Figure 5-4 
-Refer to Figure 5-4. If the price decreases in the region of the demand curve between points A and B, we can expect total revenue to
A) increase.
B) stay the same.
C) decrease.
D) first decrease, then increase until total revenue is maximized.

Accepted Answer

The answer of Figure 5-4 
-Refer to Figure 5-4. If...

Question 11

Figure 5-4 
-Refer to Figure 5-4. If the price increases in the region of the demand curve between points A and B, we can expect total revenue to
A) increase.
B) stay the same.
C) decrease.
D) first increase, then decrease until total revenue is maximized.

Accepted Answer

In the region between points A and B, the demand curve is elastic, meaning that an increase in price will lead to a decrease in quantity demanded that is proportionally greater than the increase in price. Therefore, an increase in price in this region will result in a decrease in total revenue.

Question 12

Figure 5-5 
-Refer to Figure 5-5. At a price of $10 per unit, sellers' total revenue equals
A) $100.
B) $450
C) $500.
D) $1250.

Accepted Answer

The answer of Figure 5-5 
-Refer to Figure 5-5. At...

Question 13

Figure 5-4 
-Refer to Figure 5-4. Assume the section of the demand curve from A to B corresponds to prices between $6 and $12. Then, when the price increases from $8 to $10,
A) the percent decrease in the quantity demanded exceeds the percent increase in the price.
B) the percent increase in the price exceeds the percent decrease in the quantity demanded.
C) sellers' total revenue increases as a result.
D) it is possible that the quantity demanded fell from 550 to 500 as a result.

Accepted Answer

The answer of Figure 5-4 
-Refer to Figure 5-4. Assume...

Question 14

Figure 5-4 
-Refer to Figure 5-4. The section of the demand curve from A to B represents the
A) elastic section of the demand curve.
B) inelastic section of the demand curve.
C) unit elastic section of the demand curve.
D) perfectly elastic section of the demand curve.

Accepted Answer

The section of the demand curve from A to B is relatively flat, indicating that a small change in price leads to a relatively large change in quantity demanded. This is characteristic of an elastic demand, where consumers are highly responsive to changes in price.

Question 15

Figure 5-4 
-Refer to Figure 5-4. The section of the demand curve from B to C represents the
A) elastic section of the demand curve.
B) perfectly elastic section of the demand curve.
C) unit elastic section of the demand curve.
D) inelastic section of the demand curve.

Accepted Answer

The answer of Figure 5-4 
-Refer to Figure 5-4. The...

Question 16

Figure 5-4 
-Refer to Figure 5-4. Assume, for the good in question, two specific points on the demand curve are (Q = 2,000, P= $15) and (Q = 2,400, P = $12). Then which of the following scenarios is possible?
A) Both of these points lie on section BC of the demand curve.
B) The vertical intercept of the demand curve is the point (Q = 0, P = $22).
C) The horizontal intercept of the demand curve is the point (Q = 5,000, P = $0).
D) Any of these scenarios is possible.

Accepted Answer

The answer of Figure 5-4 
-Refer to Figure 5-4. Assume,...

Question 17

Figure 5-4 
-Refer to Figure 5-4. Assume, for the good in question, two specific points on the demand curve are (Q = 1,000, P= $40) and (Q = 1,500, P = $30). Then which of the following scenarios is possible?
A) Both of these points lie on the section of the demand curve from B to C.
B) The vertical intercept of the demand curve is the point (Q = 0, P = $60).
C) The horizontal intercept of the demand curve is the point (Q = 1,800, P = $0).
D) Any of these scenarios is possible.

Accepted Answer

The answer of Figure 5-4 
-Refer to Figure 5-4. Assume,...

Question 18

Figure 5-4 
-Refer to Figure 5-4. The section of the demand curve from B to C represents the
A) elastic section of the demand curve.
B) inelastic section of the demand curve.
C) unit elastic section of the demand curve.
D) perfectly elastic section of the demand curve.

Accepted Answer

The section of the demand curve from B to C represents the inelastic section of the demand curve, where a change in price will result in a proportionately smaller change in quantity demanded.

Question 19

Figure 5-4 
-Refer to Figure 5-4. The section of the demand curve at point B represents the
A) elastic section of the demand curve.
B) inelastic section of the demand curve.
C) unit elastic section of the demand curve.
D) perfectly elastic section of the demand curve.

Accepted Answer

The answer of Figure 5-4 
-Refer to Figure 5-4. The...

Question 20

Figure 5-4 
-Refer to Figure 5-4. If the price decreases in the region of the demand curve between points B and C, we can expect total revenue to
A) increase.
B) stay the same.
C) decrease.
D) first increase, then decrease until total revenue is maximized.

Accepted Answer

According to the law of demand, as the price of a good decreases, the quantity demanded increases. In this case, as the price decreases between points B and C, the quantity demanded will increase, but not enough to offset the decrease in price. Therefore, total revenue (price multiplied by quantity) will decrease.

Quiz 5: Elasticity and Its Application

Figure 5-4 -Refer to Figure 5-4. Assume the section of the demand curve from A to B corresponds to prices between $8 and $16. Then, when the price changes between $9 and $10,

Figure 5-4 -Refer to Figure 5-4. If the price increases in the region of the demand curve between points B and C, we can expect total revenue to

Figure 5-5 -Refer to Figure 5-5. At a price of $70 per unit, sellers' total revenue equals

Figure 5-4 -Refer to Figure 5-4. Assume the section of the demand curve from B to C corresponds to prices between $0 and $15. Then, when the price changes between $7 and $9,

Figure 5-5 -Refer to Figure 5-5. Using the midpoint method, between prices of $50 and $60, price elasticity of demand is about

Figure 5-5 -Refer to Figure 5-5. Using the midpoint method, demand is unit elastic between prices of

Figure 5-5 -Refer to Figure 5-5. The maximum value of total revenue corresponds to a price of

Figure 5-5 -Refer to Figure 5-5. Using the midpoint method, between prices of $20 and $30, price elasticity of demand is about

Figure 5-5 -Refer to Figure 5-5. Using the midpoint method, between prices of $70 and $80, price elasticity of demand is

Figure 5-4 -Refer to Figure 5-4. If the price decreases in the region of the demand curve between points A and B, we can expect total revenue to

Figure 5-4 -Refer to Figure 5-4. If the price increases in the region of the demand curve between points A and B, we can expect total revenue to

Figure 5-5 -Refer to Figure 5-5. At a price of $10 per unit, sellers' total revenue equals

Figure 5-4 -Refer to Figure 5-4. Assume the section of the demand curve from A to B corresponds to prices between $6 and $12. Then, when the price increases from $8 to $10,

Figure 5-4 -Refer to Figure 5-4. The section of the demand curve from A to B represents the

Figure 5-4 -Refer to Figure 5-4. The section of the demand curve from B to C represents the

Figure 5-4 -Refer to Figure 5-4. Assume, for the good in question, two specific points on the demand curve are (Q = 2,000, P= $15) and (Q = 2,400, P = $12) . Then which of the following scenarios is possible?

Figure 5-4 -Refer to Figure 5-4. Assume, for the good in question, two specific points on the demand curve are (Q = 1,000, P= $40) and (Q = 1,500, P = $30) . Then which of the following scenarios is possible?

Figure 5-4 -Refer to Figure 5-4. The section of the demand curve from B to C represents the

Figure 5-4 -Refer to Figure 5-4. The section of the demand curve at point B represents the

Figure 5-4 -Refer to Figure 5-4. If the price decreases in the region of the demand curve between points B and C, we can expect total revenue to