Question 1

Related to the Economics in Practice on page 108: Which of the following, if true, would most effectively undermine the argument that raising cigarette taxes reduces the number of people who smoke cigarettes?

Accepted Answer

A)   The demand for cigarettes is relatively inelastic.
B)   The demand for cigarettes is relatively elastic.
C)   The supply for cigarettes is relatively inelastic.
D)   The supply for cigarettes is relatively elastic.E) None of the above
F) C) and D)

Question 2

Related to the Economics in Practice on page 109: Which of the following best explains why demand is often more elastic in the long run than it is in the short run?

Accepted Answer

A)   When demand is elastic, price increases reduce revenue because a small price increase will lead to a large decrease in quantity demanded.
B)   In the long run, consumers have greater access to substitutes.
C)   Consumers tend to postpone making purchasing decisions as long as possible.
D)   In the short run, prices can change rapidly, but in the long run they are more stable.E) A) and D)
F) B) and C)

Question 3

When demand is inelastic, a decrease in price will result in an increase in total revenue.

Accepted Answer

A) True 
 B)False

Question 4

The owner of a local hot dog stand has estimated that if he lowers the price of hot dogs from $2.00 to $1.50, he will increase sales from 400 to 500 hot dogs per day. Using the midpoint formula, the demand for hot dogs is

Accepted Answer

A)   elastic.
B)   inelastic.
C)   unit elastic.
D)   perfectly elastic.E) C) and D)
F) A) and B)

Question 5

If a group has a negative elasticity of labor supply (above some income level), then continued increases in wages will result in decreases in the quantity of labor supplied.

Accepted Answer

A) True 
 B)False

Question 6

When demand is unit elastic, an increase in price will result in an increase in total revenue.

Accepted Answer

A) True 
 B)False

Exam 5: Elasticity

Related to the Economics in Practice on page 109: Which of the following best explains why demand is often more elastic in the long run than it is in the short run?

Correct Answer
verified

The owner of a local hot dog stand has estimated that if he lowers the price of hot dogs from $2.00 to $1.50, he will increase sales from 400 to 500 hot dogs per day. Using the midpoint formula, the demand for hot dogs is

Correct Answer
verified

Related to the Economics in Practice on page 108: Which of the following, if true, would most effectively undermine the argument that raising cigarette taxes reduces the number of people who smoke cigarettes?

Correct Answer
verified

When demand is inelastic, a decrease in price will result in an increase in total revenue.

Correct Answer
verified

When demand is unit elastic, an increase in price will result in an increase in total revenue.

Correct Answer
verified

If a group has a negative elasticity of labor supply (above some income level), then continued increases in wages will result in decreases in the quantity of labor supplied.

Correct Answer
verified

Exam 5: Elasticity

Related to the Economics in Practice on page 109: Which of the following best explains why demand is often more elastic in the long run than it is in the short run?

Correct AnswerverifiedShow Answer

The owner of a local hot dog stand has estimated that if he lowers the price of hot dogs from $2.00 to $1.50, he will increase sales from 400 to 500 hot dogs per day. Using the midpoint formula, the demand for hot dogs is

Correct AnswerverifiedShow Answer

Related to the Economics in Practice on page 108: Which of the following, if true, would most effectively undermine the argument that raising cigarette taxes reduces the number of people who smoke cigarettes?

Correct AnswerverifiedShow Answer

When demand is inelastic, a decrease in price will result in an increase in total revenue.

Correct AnswerverifiedShow Answer

When demand is unit elastic, an increase in price will result in an increase in total revenue.

Correct AnswerverifiedShow Answer

If a group has a negative elasticity of labor supply (above some income level), then continued increases in wages will result in decreases in the quantity of labor supplied.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified