Question 1

A given supply curve has a zero intercept.At the current equilibrium price the price elasticity of supply equals

Accepted Answer

A)  1. 
B)  0. 
C)  2. 
D)  Not enough information. 
A)  1. 
B)  0. 
C)  2. 
D)  Not enough information.

Question 2

For all goods,the long run demand curve is always more elastic than the short run demand curve.

Accepted Answer

A) True 
 B)False

Question 3

The change in price that results from a rightward shift in demand will be greater if

Accepted Answer

A)  the supply curve is horizontal than if the supply curve is upward sloping. 
B)  the supply curve is relatively steep than if the supply curve is relatively flat. 
C)  the supply curve is upward sloping than if the supply curve is vertical. 
D)  the supply curve is horizontal than if the supply curve is vertical. 
A)  the supply curve is horizontal than if the supply curve is upward sloping. 
B)  the supply curve is relatively steep than if the supply curve is relatively flat. 
C)  the supply curve is upward sloping than if the supply curve is vertical. 
D)  the supply curve is horizontal than if the supply curve is vertical.

Question 4

How will a decrease in price affect a firm's revenues?

Accepted Answer

A)  It depends on the price elasticity of demand. 
B)  Revenues will stay the same. 
C)  Revenues will decrease. 
D)  Revenues will increase. 
A)  It depends on the price elasticity of demand. 
B)  Revenues will stay the same. 
C)  Revenues will decrease. 
D)  Revenues will increase.

Question 5

A vertical demand curve for a particular good implies that consumers are

Accepted Answer

A)  sensitive to changes in the price of that good. 
B)  not sensitive to changes in the price of that good. 
C)  irrational. 
D)  not interested in that good. 
A)  sensitive to changes in the price of that good. 
B)  not sensitive to changes in the price of that good. 
C)  irrational. 
D)  not interested in that good.

Question 6

Because demand curves slope downward according to the Law of Demand,the price elasticity of demand is a negative number.

Accepted Answer

A) True 
 B)False

Question 7

Explain whether you would expect the elasticity of supply to be highly elastic or inelastic for fresh cut flowers and why.

Accepted Answer

The elasticity of supply is ve

Question 8

Suppose the market for grass seed can be expressed as
Demand: QD = 100 - 2p
Supply: QS = 3p
If government imposes a 10% ad valorem tax to be collected from sellers,what is the price consumers will pay? How much tax revenue is collected?

Accepted Answer

First rearrange the supply curve,p = Q/3

Question 9

If the supply curve for orange juice is estimated to be Q = 40 + 2p,then,at a price of $2,the price elasticity of supply is

Accepted Answer

A)  .01. 
B)  .09. 
C)  1. 
D)  11. 
A)  .01. 
B)  .09. 
C)  1. 
D)  11.

Question 10

Suppose the demand curve for a good is downward sloping and the supply curve is upward sloping.At the market equilibrium,if demand is more elastic than supply in absolute value,a $1 specific tax will

Accepted Answer

A)  raise the price to consumers by 50 cents. 
B)  raise the price to consumers by less than 50 cents. 
C)  raise the price to consumers by more than 50 cents. 
D)  raise the price to consumers by $1. 
A)  raise the price to consumers by 50 cents. 
B)  raise the price to consumers by less than 50 cents. 
C)  raise the price to consumers by more than 50 cents. 
D)  raise the price to consumers by $1.

Question 11

-The above figure shows the supply and demand curves for rice in the U.S.and Japan.Assume there is no trade between the two countries.If bad weather causes the supply curves in each country to shift leftward by the same amount,then

Accepted Answer

A)  the price will increase in both countries. 
B)  the price will decrease in both countries. 
C)  the change in price cannot be determined. 
D)  None of the above. 
A)  the price will increase in both countries. 
B)  the price will decrease in both countries. 
C)  the change in price cannot be determined. 
D)  None of the above.

Question 12

As prices change,the elasticity of supply describes the movement

Accepted Answer

A)  of a shift in the supply curve. 
B)  of the equilibrium price. 
C)  along the supply curve. 
D)  from a necessity to a luxury good. 
A)  of a shift in the supply curve. 
B)  of the equilibrium price. 
C)  along the supply curve. 
D)  from a necessity to a luxury good.

Question 13

The duration of the "short-run"

Accepted Answer

A)  is one year. 
B)  is the same for all goods. 
C)  depends on the relative short-run elasticity of demand and supply for the good. 
D)  depends on how long it takes consumers or firms to adjust for a particular good. 
A)  is one year. 
B)  is the same for all goods. 
C)  depends on the relative short-run elasticity of demand and supply for the good. 
D)  depends on how long it takes consumers or firms to adjust for a particular good.

Question 14

Relative to the short-run demand for gasoline,the long-run demand for gasoline is

Accepted Answer

A)  probably more elastic since people need time to change automobiles and driving habits. 
B)  probably less elastic since people need time to change automobiles and driving habits. 
C)  probably more elastic because people can hoard this good. 
D)  probably less elastic because people cannot store this good. 
A)  probably more elastic since people need time to change automobiles and driving habits. 
B)  probably less elastic since people need time to change automobiles and driving habits. 
C)  probably more elastic because people can hoard this good. 
D)  probably less elastic because people cannot store this good.

A given supply curve has a zero intercept.At the current equilibrium price the price elasticity of supply equals

For all goods,the long run demand curve is always more elastic than the short run demand curve.

The change in price that results from a rightward shift in demand will be greater if

How will a decrease in price affect a firm's revenues?

A vertical demand curve for a particular good implies that consumers are

Because demand curves slope downward according to the Law of Demand,the price elasticity of demand is a negative number.

Explain whether you would expect the elasticity of supply to be highly elastic or inelastic for fresh cut flowers and why.

Suppose the market for grass seed can be expressed as Demand: Q^D = 100 - 2p Supply: Q^S = 3p If government imposes a 10% ad valorem tax to be collected from sellers,what is the price consumers will pay? How much tax revenue is collected?

If the supply curve for orange juice is estimated to be Q = 40 + 2p,then,at a price of $2,the price elasticity of supply is

Suppose the demand curve for a good is downward sloping and the supply curve is upward sloping.At the market equilibrium,if demand is more elastic than supply in absolute value,a $1 specific tax will

-The above figure shows the supply and demand curves for rice in the U.S.and Japan.Assume there is no trade between the two countries.If bad weather causes the supply curves in each country to shift leftward by the same amount,then

As prices change,the elasticity of supply describes the movement

The duration of the "short-run"

Relative to the short-run demand for gasoline,the long-run demand for gasoline is

Introduction

Supply and Demand

Consumer Choice

Applying Consumer Theory

Firms and Production

Costs

Competitive Firms and Markets

Applying the Competitive Model

General Equilibrium and Economic Welfare

Monopoly

Pricing and Advertising

Oligopoly and Monopolistic Competition

Game Theory

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters

Exam 3: Applying the Supply and Demand Model

A given supply curve has a zero intercept.At the current equilibrium price the price elasticity of supply equals

For all goods,the long run demand curve is always more elastic than the short run demand curve.

The change in price that results from a rightward shift in demand will be greater if

How will a decrease in price affect a firm's revenues?

A vertical demand curve for a particular good implies that consumers are

Because demand curves slope downward according to the Law of Demand,the price elasticity of demand is a negative number.

Explain whether you would expect the elasticity of supply to be highly elastic or inelastic for fresh cut flowers and why.

Suppose the market for grass seed can be expressed as Demand: QD = 100 - 2p Supply: QS = 3p If government imposes a 10% ad valorem tax to be collected from sellers,what is the price consumers will pay? How much tax revenue is collected?

If the supply curve for orange juice is estimated to be Q = 40 + 2p,then,at a price of $2,the price elasticity of supply is

Suppose the demand curve for a good is downward sloping and the supply curve is upward sloping.At the market equilibrium,if demand is more elastic than supply in absolute value,a $1 specific tax will

-The above figure shows the supply and demand curves for rice in the U.S.and Japan.Assume there is no trade between the two countries.If bad weather causes the supply curves in each country to shift leftward by the same amount,then

As prices change,the elasticity of supply describes the movement

The duration of the "short-run"

Relative to the short-run demand for gasoline,the long-run demand for gasoline is

Introduction

Supply and Demand

Consumer Choice

Applying Consumer Theory

Firms and Production

Costs

Competitive Firms and Markets

Applying the Competitive Model

General Equilibrium and Economic Welfare

Monopoly

Pricing and Advertising

Oligopoly and Monopolistic Competition

Game Theory

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters

Suppose the market for grass seed can be expressed as Demand: Q^D = 100 - 2p Supply: Q^S = 3p If government imposes a 10% ad valorem tax to be collected from sellers,what is the price consumers will pay? How much tax revenue is collected?