宏观经济学ch05分析解析

宏观经济学ch05分析解析

CHAPTER 5

1. If price elasticity of demand is

2.0, this implies that consumers would

a.buy twice as much of the good if price falls by 10 percent.

b.require a 2 percent cut in price to raise quantity demanded

of the good by 1 percent.

c.buy 2 percent more of the good in response to a 1 percent

cut in price.

d.require at least a $2 increase in price before showing any

response to the price increase.

ANSWER: c buy 2 percent more of the good in response to a 1 percent cut in price.

TYPE: M KEY1: D SECTION: 1 OBJECTIVE: 1 RANDOM: Y

2. If the price elasticity of demand within the price range from $1 and $1.25 for carrots is 0.79 and for radishes is 1.6, then within that price range

a.carrots are more price elastic than radishes.

b.radishes are more price elastic than carrots.

c.carrots and radishes must be substitute goods.

d.carrots and radishes must be complementary goods. ANSWER: b radishes are more price elastic than carrots. TYPE: M KEY1: D SECTION: 1 OBJECTIVE: 1 RANDOM: Y

3. Sue’s Bagel Shop wants to estimate how responsive bagels are to a change in cream cheese prices. To accomplish this task, the following data would NOT be needed?

a.Percentage change in bagel price.

b.Original price of cream cheese.

c.New quantity of bagels sol

d.

d.Original quantity of bagels sold.

ANSWER: a Percentage change in bagel prices.

RANDOM: Y

4. If Weiskamp T-Shirt Co. lowers its price from $6 to $5 and finds that students increase their quantity demanded from 400 to 600 T-shirts, then the demand for Weiskamp T-shirts within this price range is

a.price inelastic.

b.price elasti

c.

c.unit elastic.

d.cross elastic.

ANSWER: b price elastic

TYPE: M KEY1: C SECTION: 1 OBJECTIVE: 1 RANDOM: Y

5. Demand for which of the following goods is the most likely to be (nearly) perfectly elastic?

a.Emergency surgery.

b.Ford automobile.

c.Farmer Ben’s wheat.

d.Diamonds.

ANSWER: a Emergency surgery.

TYPE: M KEY1: C SECTION: 1 OBJECTIVE: 2 RANDOM: Y

6. The slope of the demand curve is not the same as the price elasticity of demand because the slope of a demand curve.

a.compares percentage changes in quantity demanded and

price.

b.compares absolute changes in quantity demanded and

price.

c.obeys the law of deman

d.

d.is not constant when the demand curve is linear. ANSWER: b compares

absolute changes in quantity demanded and pric

e.

RANDOM: Y

7. The cross elasticity of demand for substitute goods must be

a.greater than one.

b.less than one.

c.zero.

d.greater than zero

ANSWER: d greater than zero.

TYPE: M KEY1: D SECTION: 1 OBJECTIVE: 2 RANDOM: Y

8. A 5 percent increase in the price of sugar reduces sugar consumption by about 10 percent. The increase causes households to

a.spend more on sugar.

b.spend less on sugar.

c.spend the same amount on sugar.

d.consumer more goods like coffee and tea that are

complements of sugar.

ANSWER: b spend less on sugar.

TYPE: M KEY1: C SECTION: 1 OBJECTIVE: 2 RANDOM: Y

9. In this figure, the slope of the demand curve

a.has a constant value of –2.

b.is higher between points T and U than between points V

and W.

c.is lower between points T and U than between points V

and W.

d.matches the value of the price elasticity of demand at each

point.

ANSWER: a has a constant value of –2.

TYPE: M KEY1: D SECTION: 1 OBJECTIVE: 2 RANDOM: Y

10. In this figure, the price elasticity of demand between $12 and $6 using the midpoint method is

a.-.5

b.-.82

c.-1.22

d.–2.00

ANSWER: b -.82

TYPE: M KEY1: C SECTION: 1 OBJECTIVE: 2 RANDOM: Y

11. As a result of heavy spring rains in the Midwestern states, the corn crop declined sharply. If corn growers experienced an increase in sales revenue, the demand for corn must be

a.price elastic.

b.price inelasti

c.

c.unitary elastic.

d.perfectly inelastic.

ANSWER: b price inelastic.

TYPE: M KEY1: C SECTION: 1 OBJECTIVE: 2 RANDOM: Y

12. The U.S. Post Office finds that it now has extra costs associated with de-contaminating first class mail for anthrax. It is considering a rate hike, but it will only be successful in raising more revenue to pay for these additional costs if

a.there are many substitutes for first class mail service.

b.no anthrax is found on the mail.

c.the demand for first class mail service is inelastic.

d.the rate increase is a very large on

e.

ANSWER: d the demand for first class mail service is inelastic. TYPE: M KEY1: C SECTION: 1 OBJECTIVE: 2 RANDOM: Y

13. Suppose that the elasticity of supply of lawn mowers is 1.5. If the price of lawn mowers rises 5 percent, the quantity supplied of lawn mowers would

a.decline 7.5 percent.

b.rise 7.5 percent.

c.rise 1.5 percent.

d.rise 0.3 percent.

ANSWER: b rise 7.5 percent.

TYPE: M KEY1: C SECTION: 2 OBJECTIVE: 3 RANDOM: Y

14. A decrease in supply will raise the equilibrium price most when demand is

a.relatively elastic.

b.relatively inelasti

c.

c.unit elastic.

d.perfectly elastic.

ANSWER: b relatively inelastic.

TYPE: M KEY1: C SECTION: 2 OBJECTIVE: 3 RANDOM: Y

15. In this diagram, the price elasticity of supply between points A and B is

a.2.

b..33

c..66.

d.3.33

ANSWER: c .66

TYPE: M KEY1: C SECTION: 2 OBJECTIVE: 3 RANDOM: Y

Quantity supplied

15 45

16. In this diagram, the slope of the supply curve between points A and B is

a.2.

b..33

c..66

d.3.33

ANSWER: d 3.33

TYPE: M KEY1: C SECTION: 2 OBJECTIVE: 3 RANDOM: Y

17. A perfectly inelastic supply curve represents

a.a product supply that is extremely responsive to a price

change.

b.a product with a constant price, regardless of the quantity

offered for sale.

c.a product in abundant in supply.

d.a fixed supply of a good.

ANSWER: d a fixed supply of a good.

TYPE: M KEY1: C SECTION: 2 OBJECTIVE: 3 RANDOM: Y

18. Elasticity of supply becomes _______ elastic over time because _______.

a.less; of the growing scarcity of resources.

b.less; suppliers have more time to acquire additional

resources to achieve desired capacity.

c.more; demand becomes more inelastic.

d.more; suppliers have more time to acquire additional

resources to achieve desired capacity.

ANSWER: d more; suppliers have more time to acquire additional resources to achieve desired capacity.

TYPE: M KEY1: D SECTION: 2 OBJECTIVE: 4 RANDOM: Y

19. In which of the markets listed below would you expect the least elastic response from suppliers?

a.Fast food.

b.Soft drink.

c.Road building.

d.Picasso paintings.

ANSWER: d Picasso paintings.

TYPE: M KEY1: C SECTION: 2 OBJECTIVE: 4 RANDOM: Y

20. If the price elasticity of supply equals zero, this implies that

a.suppliers can easily change quantity supplied when price

changes.

b.the supply curve is perfectly vertical.

c.the percentage change in price of the good supplied is zero.

d.the percentage change in quantity supplied equals the

percentage change in price.

ANSWER: b the supply curve is perfectly vertical.

TYPE: M KEY1: D SECTION: 2 OBJECTIVE: 3 RANDOM: Y

21. Elasticity of supply for the long run is

a.always greater than the long-run price elasticity of demand.

b.always zero.

c.perfectly inelastic.

d.always greater than the short-run elasticity of supply. ANSWER: d always greater than the short-run elasticity of supply.

TYPE: M KEY1: C SECTION: 2 OBJECTIVE: 3 RANDOM: Y

22. The supply of food

a.is subject to significant technological advance in the long

run.

b.is characterized by a large price elasticity of demand.

c.has been decreasing over the long run.

d.can be represented by a horizontal supply curv

e. ANSWER: a is subject to significant technological advance in the long run.

TYPE: M KEY1: D SECTION: 3 OBJECTIVE: 5 RANDOM: Y

23. One response to increased oil prices that reflects long-run elasticity and not short-run elasticity is

a.gasoline rationing.

b.shorter family vacations.

c.smaller cars.

d.cooler homes and offices in winter.

ANSWER: c smaller cars.

TYPE: M KEY1: C SECTION: 3 OBJECTIVE: 5 RANDOM: Y

24. A government seeking to raise revenue would be most likely to tax a good

with a

a.high income elasticity of demand.

b.low cross-price demand elasticity.

c.high price elasticity of deman

d.

d.low price elasticity of demand.

ANSWER: d low price elasticity of demand.

TYPE: M KEY1: C SECTION: 3 OBJECTIVE: 5 RANDOM: Y

25. When comparing price elasticities of demand for gasoline in the long run to the short run, what can we say about the long-run elasticities?

a.Within every price range, the price elasticity of demand

for gasoline is more elastic in the long run.

b.Consumers are less sensitive to changes in the price of

gasoline in the long run.

c.Within every price range, the price elasticity of demand is

less elastic in the long run.

d.The price elasticity of demand for gasoline tends towards

unit elastic in the long run.

ANSWER: a Within every price range, the price elasticity of demand for gasoline is more elastic in the long run.

TYPE: M KEY1: C SECTION: 3 OBJECTIVE: 5 RANDOM: Y

26. If the fines and jail time for dealing illegal drugs were reduced, we would expect

a.an increased demand for illegal drugs.

b.an increased supply of illegal drugs, a lower price, and

higher quantity traded.

c.a decreased supply of illegal drugs, a higher price, and

lower quantity traded.

d.no change in the market for illegal drugs because buyers

and sellers believe they won’t get caught.

ANSWER: b an increased supply of illegal drugs, a lower price, and higher quantity traded.

TYPE: M KEY1: C SECTION: 3 OBJECTIVE: 5 RANDOM: Y