Principles of Economics 6th Edition By N. Gregory Mankiw – Test Bank

$20.00

Edition: 6th Edition

Format: Downloadable ZIP File

Resource Type: Test Bank

Duration: Unlimited downloads

Delivery: Instant Download

Principles of Economics 6th Edition By N. Gregory Mankiw – Test Bank

Chapter 5 Elasticity and Its Application

Multiple Choice

1.In general, elasticity is a measure of

a.	the extent to which advances in technology are adopted by producers.
b.	the extent to which a market is competitive.
c.	how firms’ profits respond to changes in market prices.
d.	how much buyers and sellers respond to changes in market conditions.

ANS: D PTS: 1 DIF: 1 REF: 5-0

NAT: Analytic LOC: Elasticity TOP: Elasticity MSC: Definitional

2.Elasticity is

a.	a measure of how much buyers and sellers respond to changes in market conditions.
b.	the study of how the allocation of resources affects economic well-being.
c.	the maximum amount that a buyer will pay for a good.
d.	the value of everything a seller must give up to produce a good.

ANS: A PTS: 1 DIF: 1 REF: 5-0

NAT: Analytic LOC: Elasticity TOP: Elasticity MSC: Definitional

3.When studying how some event or policy affects a market, elasticity provides information on the

a.	equity effects on the market by identifying the winners and losers.
b.	magnitude of the effect on the market.
c.	speed of adjustment of the market in response to the event or policy.
d.	number of market participants who are directly affected by the event or policy.

ANS: B PTS: 1 DIF: 2 REF: 5-0

NAT: Analytic LOC: Elasticity TOP: Elasticity MSC: Interpretive

4.When studying how some event or policy affects a market, elasticity provides information on the

a.	government expenditures associated with the policy.
b.	costs and benefits of the effect.
c.	allocative efficiency of the effect.
d.	direction and magnitude of the effect.

ANS: D PTS: 1 DIF: 2 REF: 5-0

NAT: Analytic LOC: Elasticity TOP: Elasticity MSC: Interpretive

5.How does the concept of elasticity allow us to improve upon our understanding of supply and demand?

a.	Elasticity allows us to analyze supply and demand with greater precision than would be the case in the absence of the elasticity concept.
b.	Elasticity provides us with a better rationale for statements such as “an increase in x will lead to a decrease in y” than we would have in the absence of the elasticity concept.
c.	Without elasticity, we would not be able to address the direction in which price is likely to move in response to a surplus or a shortage.
d.	Without elasticity, it is very difficult to assess the degree of competition within a market.

ANS: A PTS: 1 DIF: 2 REF: 5-0

NAT: Analytic LOC: Elasticity TOP: Elasticity MSC: Interpretive

6.When consumers face rising gasoline prices, they typically

a.	reduce their quantity demanded more in the long run than in the short run.
b.	reduce their quantity demanded more in the short run than in the long run.
c.	do not reduce their quantity demanded in the short run or the long run.
d.	increase their quantity demanded in the short run but reduce their quantity demanded in the long run.

ANS: A PTS: 1 DIF: 2 REF: 5-0

NAT: Analytic LOC: Elasticity TOP: Elasticity MSC: Applicative

7.A 10 percent increase in gasoline prices reduces gasoline consumption by about

a.	6 percent after one year and 2.5 percent after five years.
b.	2.5 percent after one year and 6 percent after five years.
c.	10 percent after one year and 20 percent after five years.
d.	0 percent after one year and 1 percent after five years.

ANS: B PTS: 1 DIF: 2 REF: 5-0

NAT: Analytic LOC: Elasticity TOP: Elasticity MSC: Applicative

8.Which of the following statements about the consumers’ responses to rising gasoline prices is correct?

a.	About 10 percent of the long-run reduction in quantity demanded arises because people drive less and about 90 percent arises because they switch to more fuel-efficient cars.
b.	About 90 percent of the long-run reduction in quantity demanded arises because people drive less and about 10 percent arises because they switch to more fuel-efficient cars.
c.	About half of the long-run reduction in quantity demanded arises because people drive less and about half arises because they switch to more fuel-efficient cars.
d.	Because gasoline is a necessity, consumers do not decrease their quantity demanded in either the short run or the long run.

ANS: C PTS: 1 DIF: 2 REF: 5-0

NAT: Analytic LOC: Elasticity TOP: Elasticity MSC: Applicative

The Elasticity of Demand

1.The price elasticity of demand measures how much

a.	quantity demanded responds to a change in price.
b.	quantity demanded responds to a change in income.
c.	price responds to a change in demand.
d.	demand responds to a change in supply.

ANS: A PTS: 1 DIF: 1 REF: 5-1

NAT: Analytic LOC: Elasticity TOP: Price elasticity of demand

MSC: Definitional

2.The price elasticity of demand measures

a.	buyers’ responsiveness to a change in the price of a good.
b.	the extent to which demand increases as additional buyers enter the market.
c.	how much more of a good consumers will demand when incomes rise.
d.	the movement along a supply curve when there is a change in demand.

ANS: A PTS: 1 DIF: 1 REF: 5-1

NAT: Analytic LOC: Elasticity TOP: Price elasticity of demand

MSC: Definitional

MAECENAS IACULIS

Vestibulum curae torquent diam diam commodo parturient penatibus nunc dui adipiscing convallis bulum parturient suspendisse parturient a.Parturient in parturient scelerisque nibh lectus quam a natoque adipiscing a vestibulum hendrerit et pharetra fames nunc natoque dui.

ADIPISCING CONVALLIS BULUM

Vestibulum penatibus nunc dui adipiscing convallis bulum parturient suspendisse.
Abitur parturient praesent lectus quam a natoque adipiscing a vestibulum hendre.
Diam parturient dictumst parturient scelerisque nibh lectus.

Scelerisque adipiscing bibendum sem vestibulum et in a a a purus lectus faucibus lobortis tincidunt purus lectus nisl class eros.Condimentum a et ullamcorper dictumst mus et tristique elementum nam inceptos hac parturient scelerisque vestibulum amet elit ut volutpat.