318 ? Chapter 5 /Elasticity and Its Application
Table 5-4 Price $10 $12 $14 $16 Total Revenue $100 $108 $112 $112 103. Refer to Table 5-4. As price rises from $10 to $12, the price elasticity of demand using the midpoint
method is approximately a. 0.08. b. 0.18. c. 0.42. d. 0.58.
ANS: D
NAT: Analytic MSC: Applicative
DIF: 3
LOC: Elasticity
REF: 5-1
TOP: Midpoint method | Price elasticity of demand
104. Refer to Table 5-4. Demand is unit elastic when quantity demanded changes from
a. 10 to 9. b. 9 to 8. c. 8 to 7.
d. There is not enough information given to determine the correct answer.
ANS: C
NAT: Analytic MSC: Analytical
DIF: 3
LOC: Elasticity
REF: 5-1
TOP: Midpoint method | Price elasticity of demand
105. Refer to Table 5-4. When price is between $10 and $14, demand is
a. elastic. b. unit elastic. c. inelastic.
d. There is not enough information given to determine whether demand is elastic, unit elastic, or
inelastic.
ANS: C
NAT: Analytic MSC: Analytical
DIF: 3
LOC: Elasticity
REF: 5-1
TOP: Midpoint method | Price elasticity of demand
Chapter 5 /Elasticity and Its Application ? 319
Figure 5-4
APriceBDemandCQuantity106. Refer to Figure 5-4. Suppose the point labeled B is the “halfway point” on the demand curve and it
corresponds to a price of $5.00. Then, between prices of $4.99 and $5.01, the price elasticity of demand is a. less than 1 but greater than zero. b. equal to 1. c. greater than 1. d. equal to zero.
ANS: B
NAT: Analytic MSC: Interpretive
DIF: 2
LOC: Elasticity
REF: 5-1
TOP: Midpoint method | Price elasticity of demand
107. 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.
ANS: A
NAT: Analytic MSC: Interpretive
DIF: 2
LOC: Elasticity
REF: 5-1
TOP: Price elasticity of demand
108. 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.
ANS: B
NAT: Analytic MSC: Interpretive
DIF: 2
LOC: Elasticity
REF: 5-1
TOP: Price elasticity of demand
109. 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.
ANS: C
NAT: Analytic MSC: Interpretive
DIF: 2
LOC: Elasticity
REF: 5-1
TOP: Price elasticity of demand
320 ? Chapter 5 /Elasticity and Its Application
110. 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.
ANS: B
NAT: Analytic MSC: Applicative
DIF: 2
LOC: Elasticity
REF: 5-1
TOP: Elastic demand
111. 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.
ANS: A
NAT: Analytic MSC: Applicative
DIF: 3
LOC: Elasticity
REF: 5-1
TOP: Elastic demand
112. 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.
ANS: B
NAT: Analytic MSC: Analytical
DIF: 3
LOC: Elasticity
REF: 5-1
TOP: Elastic demand
113. 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.
ANS: D
NAT: Analytic MSC: Interpretive
DIF: 2
LOC: Elasticity
REF: 5-1
TOP: Inelastic demand
114. 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.
ANS: A
NAT: Analytic MSC: Applicative
DIF: 2
LOC: Elasticity
REF: 5-1
TOP: Inelastic demand
115. 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 C 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.
ANS: A
NAT: Analytic MSC: Analytical
DIF: 3
LOC: Elasticity
REF: 5-1
TOP: Inelastic demand
Chapter 5 /Elasticity and Its Application ? 321
116. 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.
ANS: A
NAT: Analytic MSC: Analytical
DIF: 3
LOC: Elasticity
REF: 5-1
TOP: Total revenue | Price elasticity of demand
117. 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.
ANS: C
NAT: Analytic MSC: Analytical
DIF: 3
LOC: Elasticity
REF: 5-1
TOP: Total revenue | Price elasticity of demand
118. 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.
ANS: C
NAT: Analytic MSC: Analytical
DIF: 3
LOC: Elasticity
REF: 5-1
TOP: Total revenue | Price elasticity of demand
119. 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.
ANS: A
NAT: Analytic MSC: Analytical
DIF: 3
LOC: Elasticity
REF: 5-1
TOP: Total revenue | Price elasticity of demand
322 ? Chapter 5 /Elasticity and Its Application
Figure 5-5
6054484236302418126369121518212427PriceDemand3033Quantity120. Refer to Figure 5-5. Demand is unit elastic between prices of
a. $18 and $24. b. $24 and $30. c. $24 and $36. d. $30 and $36.
ANS: C
NAT: Analytic MSC: Applicative
DIF: 2
LOC: Elasticity
REF: 5-1
TOP: Price elasticity of demand
121. Refer to Figure 5-5. Using the midpoint method, between prices of $12 and $18, price elasticity of demand is
a. 0.33. b. 0.67. c. 1.33. d. 1.89.
ANS: A
NAT: Analytic MSC: Applicative
DIF: 2
LOC: Elasticity
REF: 5-1
TOP: Midpoint method | Price elasticity of demand
122. Refer to Figure 5-5. Using the midpoint method, between prices of $48 and $54, price elasticity of demand is
about a. 0.92. b. 3.89. c. 4.33. d. 5.67.
ANS: D
NAT: Analytic MSC: Applicative
DIF: 2
LOC: Elasticity
REF: 5-1
TOP: Price elasticity of demand
123. Refer to Figure 5-5. Using the midpoint method, between prices of $30 and $36, price elasticity of demand is
about a. 0.5. b. 0.82. c. 1.22. d. 2.
ANS: C
NAT: Analytic MSC: Applicative
DIF: 2
LOC: Elasticity
REF: 5-1
TOP: Price elasticity of demand