Question 1

The supply of veterinarians tends to be inelastic in the short run because of the years of training required for new entrants.

Accepted Answer

A) True 
 B)False

Question 2

If the price elasticity of supply for fresh eggplant is 0.8, then a 10 percent increase in the price of eggplant will cause a(n) _______ percent increase in the quantity supplied.

Accepted Answer

A)  8 
B)  80 
C)  1.2 
D)  0.8 
A)  8 
B)  80 
C)  1.2 
D)  0.8

Question 3

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

Accepted Answer

A)  less than 1 
B)  less than zero 
C)  greater than zero 
D)  greater than 1 
A)  less than 1 
B)  less than zero 
C)  greater than zero 
D)  greater than 1

Question 4

For a given supply curve of gasoline, the less elastic the demand, the larger the fraction of an excise tax that is borne by consumers.

Accepted Answer

A) True 
 B)False

Question 5

Suppose that an excise tax of $1 is levied on the sale of a bottle of wine. Usually this tax will be paid

Accepted Answer

A)  entirely by the seller if the consumer demand for wine is perfectly elastic 
B)  entirely by the consumer if the supply of wine is perfectly inelastic 
C)  by both the seller and the consumer, with the greater portion of the tax being paid by the consumer if the demand for wine is relatively inelastic 
D)  neither by the seller nor by the consumer 
A)  entirely by the seller if the consumer demand for wine is perfectly elastic 
B)  entirely by the consumer if the supply of wine is perfectly inelastic 
C)  by both the seller and the consumer, with the greater portion of the tax being paid by the consumer if the demand for wine is relatively inelastic 
D)  neither by the seller nor by the consumer

Question 6

Renters usually spend a large proportion of their incomes on rent. Therefore, the price elasticity of demand for rental apartments is most likely to be which of the following numbers?

Accepted Answer

A)  2.2 
B)  1.0 
C)  0.5 
D)  0 
A)  2.2 
B)  1.0 
C)  0.5 
D)  0

Question 7

Some credit card companies have been able to charge very high rates on credit cards without losing too many customers because the demand for credit cards seems to be elastic.

Accepted Answer

A) True 
 B)False

Question 8

The demand for a product is relatively inelastic if

Accepted Answer

A)  only a few close-substitute products are available 
B)  spending on the product constitutes a large portion of consumer income 
C)  the product is considered to be a luxury 
D)  the consumer has considerable time to adjust to price changes 
A)  only a few close-substitute products are available 
B)  spending on the product constitutes a large portion of consumer income 
C)  the product is considered to be a luxury 
D)  the consumer has considerable time to adjust to price changes

Question 9

The government wants to raise additional tax revenues with the least disruption to prevailing demand patterns. For which product should an excise tax be levied?

Accepted Answer

A)  root beer 
B)  diapers 
C)  Purina dog food 
D)  hot tubs 
A)  root beer 
B)  diapers 
C)  Purina dog food 
D)  hot tubs

Question 10

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

Accepted Answer

A)  less than 1 
B)  equal to 1 
C)  greater than 1 
D)  less than zero 
A)  less than 1 
B)  equal to 1 
C)  greater than 1 
D)  less than zero

Question 11

If motorists decrease their gasoline consumption by 2 percent when the price increases by 10 percent, the demand for gasoline is relatively inelastic.

Accepted Answer

A) True 
 B)False

Question 12

A tax on diamonds will raise only a small amount of revenue for the government when the demand for diamonds is

Accepted Answer

A)  equal to the supply of diamonds 
B)  elastic 
C)  inelastic 
D)  very high 
A)  equal to the supply of diamonds 
B)  elastic 
C)  inelastic 
D)  very high

Question 13

Which of the following products is likely to have the lowest price elasticity of demand?

Accepted Answer

A)  foreign travel 
B)  Mobil motor oil 
C)  Green Giant peas 
D)  medical care 
A)  foreign travel 
B)  Mobil motor oil 
C)  Green Giant peas 
D)  medical care

Question 14

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

Accepted Answer

A)  0.4 
B)  1.2 
C)  1.4 
D)  2.0 
A)  0.4 
B)  1.2 
C)  1.4 
D)  2.0

Question 15

The government is thinking about increasing the gasoline tax to promote conservation. The tax will discourage the consumption of gasoline by the greatest extent when the price elasticity of demand equals

Accepted Answer

A)  0.1 
B)  0.7 
C)  1.3 
D)  2.0 
A)  0.1 
B)  0.7 
C)  1.3 
D)  2.0

Question 16

Laws creating interest rate ceilings include all of the following side effects except

Accepted Answer

A)  bankers discriminating against certain borrowers 
B)  decreased profitability for bankers making loans 
C)  not everyone who wants a loan can get one 
D)  lenders charging excessively high interest rates 
A)  bankers discriminating against certain borrowers 
B)  decreased profitability for bankers making loans 
C)  not everyone who wants a loan can get one 
D)  lenders charging excessively high interest rates

Question 17

$\begin{array}{ccc}
\begin{array}{c}
\text { Price per } \
\text { Bushel }
\end{array} & \begin{array}{c}
\text { Quantity of Bushels } \
\text { Demanded per Month }
\end{array} & \begin{array}{c}
\text { Quantity of Bushels } \
\text { Supplied per Month }
\end{array} \
\$2&800&400\
3 &  700 & 500 \
4 &600 & 600 \
5 &500 & 700  \
6 &  300 & 800\
\end{array}$
-Refer to Table 3.1. To maintain a $5 support price, government must

Accepted Answer

A)  sell 200 bushels of wheat at revenues totaling $800 
B)  sell 700 bushels of wheat are revenues totaling $3,500 
C)  purchase 200 bushels of wheat at a total cost of $1,000 
D)  purchase 500 bushels of wheat at a total cost of $2,500 
A)  sell 200 bushels of wheat at revenues totaling $800 
B)  sell 700 bushels of wheat are revenues totaling $3,500 
C)  purchase 200 bushels of wheat at a total cost of $1,000 
D)  purchase 500 bushels of wheat at a total cost of $2,500

Question 18

Demand is relatively elastic when the percentage change in price exceeds the percentage change in quantity demanded.

Accepted Answer

A) True 
 B)False

Question 19

If a 1 percent change in price leads to 5 percent change in quantity demanded, then the price elasticity of demand is 5.

Accepted Answer

A) True 
 B)False

Question 20

If the price elasticity of supply for boots is 1.0 in the short run, then in the long run, we would expect the price elasticity of supply to become less that 1.0.

Accepted Answer

A) True 
 B)False

The supply of veterinarians tends to be inelastic in the short run because of the years of training required for new entrants.

If the price elasticity of supply for fresh eggplant is 0.8, then a 10 percent increase in the price of eggplant will cause a(n) _______ percent increase in the quantity supplied.

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

For a given supply curve of gasoline, the less elastic the demand, the larger the fraction of an excise tax that is borne by consumers.

Suppose that an excise tax of $1 is levied on the sale of a bottle of wine. Usually this tax will be paid

Renters usually spend a large proportion of their incomes on rent. Therefore, the price elasticity of demand for rental apartments is most likely to be which of the following numbers?

Some credit card companies have been able to charge very high rates on credit cards without losing too many customers because the demand for credit cards seems to be elastic.

The demand for a product is relatively inelastic if

The government wants to raise additional tax revenues with the least disruption to prevailing demand patterns. For which product should an excise tax be levied?

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

If motorists decrease their gasoline consumption by 2 percent when the price increases by 10 percent, the demand for gasoline is relatively inelastic.

A tax on diamonds will raise only a small amount of revenue for the government when the demand for diamonds is

Which of the following products is likely to have the lowest price elasticity of demand?

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

The government is thinking about increasing the gasoline tax to promote conservation. The tax will discourage the consumption of gasoline by the greatest extent when the price elasticity of demand equals

Laws creating interest rate ceilings include all of the following side effects except

Price per Bushel Quantity of Bushels Demanded per Month Quantity of Bushels Supplied per Month \2 800 400 3 700 500 4 600 600 5 500 700 6 300 800 -Refer to Table 3.1. To maintain a $5 support price, government must

Demand is relatively elastic when the percentage change in price exceeds the percentage change in quantity demanded.

If a 1 percent change in price leads to 5 percent change in quantity demanded, then the price elasticity of demand is 5.

If the price elasticity of supply for boots is 1.0 in the short run, then in the long run, we would expect the price elasticity of supply to become less that 1.0.

Scarcity and Choice

Market Transactions: Demand and Supply Analysis

Production and the Costs of Production

Competition and Monopoly: Virtues and Vices

Imperfect Competition

Labor Markets

Government and Markets

The Mixed Economy of the United States

Gross Domestic Product and Economic Growth

The Business Cycle, Unemployment, and Inflation

Macroeconomic Instability: Aggregate Demand and Aggregate Supply

Fiscal Policy and the Federal Budget

Money and the Banking System

The Federal Reserve and Monetary Policy

The United States and the Global Economy

International Finance

Economic Systems and Developing Countries

Filters

Exam 3: Demand and Supply Applications

The supply of veterinarians tends to be inelastic in the short run because of the years of training required for new entrants.

If the price elasticity of supply for fresh eggplant is 0.8, then a 10 percent increase in the price of eggplant will cause a(n) _______ percent increase in the quantity supplied.

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

For a given supply curve of gasoline, the less elastic the demand, the larger the fraction of an excise tax that is borne by consumers.

Suppose that an excise tax of $1 is levied on the sale of a bottle of wine. Usually this tax will be paid

Renters usually spend a large proportion of their incomes on rent. Therefore, the price elasticity of demand for rental apartments is most likely to be which of the following numbers?

Some credit card companies have been able to charge very high rates on credit cards without losing too many customers because the demand for credit cards seems to be elastic.

The demand for a product is relatively inelastic if

The government wants to raise additional tax revenues with the least disruption to prevailing demand patterns. For which product should an excise tax be levied?

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

If motorists decrease their gasoline consumption by 2 percent when the price increases by 10 percent, the demand for gasoline is relatively inelastic.

A tax on diamonds will raise only a small amount of revenue for the government when the demand for diamonds is

Which of the following products is likely to have the lowest price elasticity of demand?

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

The government is thinking about increasing the gasoline tax to promote conservation. The tax will discourage the consumption of gasoline by the greatest extent when the price elasticity of demand equals

Laws creating interest rate ceilings include all of the following side effects except

Price per Bushel Quantity of Bushels Demanded per Month Quantity of Bushels Supplied per Month \2 800 400 3 700 500 4 600 600 5 500 700 6 300 800 -Refer to Table 3.1. To maintain a $5 support price, government must

Demand is relatively elastic when the percentage change in price exceeds the percentage change in quantity demanded.

If a 1 percent change in price leads to 5 percent change in quantity demanded, then the price elasticity of demand is 5.

If the price elasticity of supply for boots is 1.0 in the short run, then in the long run, we would expect the price elasticity of supply to become less that 1.0.

Scarcity and Choice

Market Transactions: Demand and Supply Analysis

Production and the Costs of Production

Competition and Monopoly: Virtues and Vices

Imperfect Competition

Labor Markets

Government and Markets

The Mixed Economy of the United States

Gross Domestic Product and Economic Growth

The Business Cycle, Unemployment, and Inflation

Macroeconomic Instability: Aggregate Demand and Aggregate Supply

Fiscal Policy and the Federal Budget

Money and the Banking System

The Federal Reserve and Monetary Policy

The United States and the Global Economy

International Finance

Economic Systems and Developing Countries

Filters