Exam 2: Supply and Demand

Suppose the supply curve and the demand curve both have unitary elasticity at all prices.The price increase to consumers resulting from a specific tax of $1 imposed on sellers will be

The term "inverse demand curve" refers to

If the demand curve for a good always has unitary price elasticity,what does this imply about consumer behavior?

When a market is in disequilibrium consumers and producers change their behavior.As a result the market reaches equilibrium.

In the late 1980s,the health benefits of oat bran were widely advertised.If the price of oats increased 50%,causing the quantity of oats supplied to increase by 40%,then the price elasticity of supply was

Consumers and firms are known as price takers only if

The supply-and-demand model may not be appropriate in markets with large transaction costs.

Government revenue from an excise tax of a given amount is greater when demand is relatively inelastic than when it is relatively elastic.

The short-run elasticity of supply is less than the long-run elasticity of supply

If the supply curve of a product changes so that sellers are now willing to sell two additional units at any given price,the supply curve will

Suppose the market demand curve for pizza can be expressed as Q_D = 100 - 2P + 3P_b,where Q_D is the quantity of pizza demanded,P is the price of a pizza,and P_b is the price of a burrito.What is the slope of this demand function,and what information does the slope provide?

When two goods are substitutes,a shock that raises the price of one good causes the price of the other good to

-The above figure shows the demand curve for crude oil.If the market price is $10 a barrel,what is the price elasticity of demand?

The price elasticity of demand for gasoline is estimated to be -0.2.Two million gallons are sold daily at a price of $1.Use this information to calculate a demand curve for gasoline assuming it is linear.

Why is the supply of oil more price elastic in the long run?

The demand for pizzas in a large town is written as: Q_d = 120 - 10P + 5P_b - 0.5P_s - 10Y,where Q_d is the quantity demanded,P is the price,P_b is the price of burritos,P_s is the price of soft drinks sold in the pizza restaurants,and Y is personal income per month (in thousand dollars).We can conclude that burritos and pizzas are

-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

-The above figure shows three demand curves labeled D₁,D₂,and D₃.Rank these three demand curves in terms of elasticity at a price of c.

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

As the price of a good increases,the change in the quantity demanded can be shown by