Exam 3: Demand and Supply Applications

If the price elasticity of demand for purebred Siamese kittens is 2.0, then a 4 percent decrease in the price of Siamese kittens will result in a ___ percent increase in quantity demanded.

The supply of corn will be more inelastic the

Examples of price ceilings include usury laws and minimum-wage laws for workers.

If the government imposes a price floor on sugar that is above the market equilibrium price, it may also have to

Suppose that an excise tax of $1 is levied on the sale of a bottle of fruit juice. Most of this tax will be borne by the seller rather than the buyer if the price elasticity of demand for fruit juice equals

If the government imposes a price floor on wheat, and the price is above the market equilibrium level, there will be a surplus of wheat.

A freeze would result in higher total revenue for Florida orange producers when the demand for oranges is inelastic.

Demand is considered to be elastic when the coefficient of the price elasticity of demand is

A poor harvest for farmers may be desirable because

Over time, supply becomes more elastic and demand becomes less elastic.

If Brown University increases its tuition and then its tuition revenue increases, the demand curve for attending Brown University must be

Supply is considered to be inelastic when the coefficient of the price elasticity of supply is

One positive effect of putting rent controls on apartments is that it increases the future supply of apartments.

If airlines find they cannot raise ticket prices very much when the government imposes new, much higher excise taxes, this means the demand for airline tickets is probably fairly inelastic.

Price ceilings on gasoline, such as those imposed in the 1970s in the U.S., will

Price elasticity of supply is a measure of the

Assume that the government sets a ceiling on the interest rate that banks charge on loans. If the ceiling is set below the market equilibrium interest rate, the result will be

The demand for a product tends to be less elastic if buyers consider the product to be a luxury rather than a necessity.

Which group benefits most from government agricultural subsidies?

Suppose the price elasticity of demand for cranberry juice is 1.0. This means that if the price of cranberry juice increased,