Exam 3: Applying the Supply-And-Demand Model

If the demand curve for orange juice is expressed as Q = 2000 - 500p, where Q is measured in gallons and p is measured in dollars, then at the price of $3, elasticity equals

The market demand for wheat is Q = 100 - 2p + 1p_b + 2Y. If the price of wheat, p, is $2, and the price of barley, p_b, is $3, and income, Y, is $1000, the income elasticity of wheat

Consider Sam and Linda both drive a relatively inefficient sport utility vehicle (SUV). Sam has a lease that doesn't expire for three years whereas Linda owns her sport utility vehicle free and clear. If the price of gasoline was to increase by fifty percent, which of these statements is most likely TRUE?

In the mid-1980s, the salaries of accounting professors with Ph.D.s increased dramatically. This resulted in an increase in enrollments in Ph.D. accounting programs. Since a Ph.D. degree in accounting may take at least four years to complete, the short-run elasticity of supply of accounting professors is

If the supply curve is perfectly inelastic and the demand curve is a downward sloping straight line, what is the effect of a consumer ad valorem tax on equilibrium price and quantity?

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

If the price elasticity of demand for a good is less than one in absolute value, economists would characterize consumers of this good

The rising price of oil has made it feasible to extract oil out of oily sand in Canada. Concerning the oil market this is an example of

Assume the market demand for wheat may be written as Q = 45 - 2p + 0.3Y + 1p_b where Y refers to income and p_b refers to the price of barley. Assuming that wheat and barley both sell for $1, and income is $20, calculate the price elasticity, cross price elasticity and income elasticity for wheat.

Suppose the market for grass seed is expressed as Demand: Q^D = 100 - 2p Supply: Q^S = 3p Price elasticity of supply is constant at 1. If the supply curve is changed to Q = 8p, price elasticity of supply is still constant at 1. Yet, with the new supply curve, consumers pay a larger share of a specific tax. Why?

Suppose that a specific tax of $3 is imposed on producers of bread. The bread market supply is Qs = 10 + 0.5P and the bread market demand is Qd = 100-P. What is the change in the equilibrium quantity of bread induced by the tax incidence?

The current price floor in the agricultural lettuce market makes it such that the price of lettuce is 25% higher than the equilibrium price and that 100 heads of lettuce are demanded. Assuming that the elasticity of demand for lettuce is -0.50, how much would revenue (P ∗ Q)change for the lettuce company if the government removed the current price floor?

An agricultural corn market faces a positive supply shock due to a beneficial rainy season and the use of new genetically modified seeds. As a result, farmers face the largest crop harvest in decades. Which answer below explains how a farm could actually go bankrupt under this scenario.

If the demand curve for comic books is expressed as Q = 10,000/p, then demand has a unitary elasticity

The market demand for wheat is Q = 100 - 2p + 1p_b, where p_b is the price of barley. If the price of wheat is $2 and the price of barley is $4, the price elasticity of demand

If the demand for orange juice is expressed as Q = 2000 - 500p, where Q is measured in gallons and p is measured in dollars, then at the price of $3, the demand curve

Suppliers with a high supply elasticity will bear a ________ tax incidence, while suppliers with a low supply elasticity will bear a ________ tax incidence.

If the price of orange juice rises 10%, and as a result the quantity demanded falls by 8%, the price elasticity of demand for orange juice is

If a consumer doubles her quantity of ice cream consumed when her income rises by 25%, then her income elasticity of demand for ice cream is

If a one percent increase in the population leads to a five percent increase in the quantity sold, an economist would claim