Question 1

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

Accepted Answer

A) True 
 B)False  True

Question 2

If the demand function for orange juice is expressed as Q = 2000 - 500p,where Q is quantity in gallons and p is price per gallon measured in dollars,then the demand for orange juice has a unitary elasticity when price equals

Accepted Answer

A)  $0. 
B)  $1. 
C)  $2. 
D)  $4. 
A)  $0. 
B)  $1. 
C)  $2. 
D)  $4. C

Question 3

Electricity accounts for almost 20% of the cost of making steel.A 10% increase in electricity prices results in steel firms decreasing production and thereby demanding 5% less electricity.Over many years,technological innovations can change the way steel firms make steel and reduce the industry's energy requirements.This suggests that the steel industry's short-run elasticity of demand for electricity is probably

Accepted Answer

A)  less than one in absolute terms in the short run. 
B)  less than its long-run elasticity of demand for electricity. 
C)  Both A and B above. 
D)  Neither A nor B above. 
A)  less than one in absolute terms in the short run. 
B)  less than its long-run elasticity of demand for electricity. 
C)  Both A and B above. 
D)  Neither A nor B above. C

Question 4

-The above figure shows the demand curve for crude oil.Suppose the price is currently $15.A supply shock suddenly raises the price to $17.What happens with the crude oil sales revenue?

Accepted Answer

A)  Crude oil sales revenue stays the same. 
B)  Crude oil sales revenue increases by less than $250. 
C)  Crude oil sales revenue declines by more than $300. 
D)  Crude oil sales revenue declines by less than $300. 
A)  Crude oil sales revenue stays the same. 
B)  Crude oil sales revenue increases by less than $250. 
C)  Crude oil sales revenue declines by more than $300. 
D)  Crude oil sales revenue declines by less than $300.

Question 5

Suppose the demand curve for movie tickets has unitary price elasticity and the supply curve is perfectly price elastic.If 3 million tickets are currently sold at a price of $5,approximately how much tax revenue could the government generate from a $1 specific tax?

Accepted Answer

A)  $18 million 
B)  $3 million 
C)  $2.7 million 
D)  $1.5 million 
A)  $18 million 
B)  $3 million 
C)  $2.7 million 
D)  $1.5 million

Question 6

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

Accepted Answer

A)  -1.25. 
B)  elastic. 
C)  Both A and B above. 
D)  Neither A nor B above. 
A)  -1.25. 
B)  elastic. 
C)  Both A and B above. 
D)  Neither A nor B above.

Question 7

Explain why the price elasticity of demand changes along a linear demand curve.

Accepted Answer

The price elasticity of demand

Question 8

A specific tax on sellers will

Accepted Answer

A)  shift the demand curve to the right. 
B)  shift the demand curve to the left. 
C)  shift the supply curve to the right. 
D)  shift the supply curve to the left. 
A)  shift the demand curve to the right. 
B)  shift the demand curve to the left. 
C)  shift the supply curve to the right. 
D)  shift the supply curve to the left.

Question 9

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

Accepted Answer

A)  equals (-4/46). 
B)  equals (-46). 
C)  equals (-1). 
D)  cannot be calculated without more information. 
A)  equals (-4/46). 
B)  equals (-46). 
C)  equals (-1). 
D)  cannot be calculated without more information.

Question 10

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.

Accepted Answer

A)  The elasticity of supply for corn is elastic such that a positive shock reduces total revenue. 
B)  The demand for corn is inelastic such that a positive supply shock reduces total revenue. 
C)  An inelastic demand curve will cause revenue to fall because price decreases by more than the increase in quantity demanded. 
D)  B and C 
A)  The elasticity of supply for corn is elastic such that a positive shock reduces total revenue. 
B)  The demand for corn is inelastic such that a positive supply shock reduces total revenue. 
C)  An inelastic demand curve will cause revenue to fall because price decreases by more than the increase in quantity demanded. 
D)  B and C

Question 11

As more people quit smoking in the United States,what is expected to happen to the price elasticity of supply of cigarettes?

Accepted Answer

A)  It will decrease. 
B)  It will increase. 
C)  It can increase or decrease. 
D)  It will not change. 
A)  It will decrease. 
B)  It will increase. 
C)  It can increase or decrease. 
D)  It will not change.

Question 12

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

Accepted Answer

A)  1.25. 
B)  -1.25. 
C)  -0.80. 
D)  0.80. 
A)  1.25. 
B)  -1.25. 
C)  -0.80. 
D)  0.80.

Question 13

Consider the following products.Which of them has the flattest demand curve?

Accepted Answer

A)  insulin 
B)  alcohol 
C)  cigarettes 
D)  butter 
A)  insulin 
B)  alcohol 
C)  cigarettes 
D)  butter

Question 14

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

Accepted Answer

A)  the good is elastic with respect to population. 
B)  the good is inelastic with respect to population. 
C)  the good is a fad. 
D)  consumers are misinformed about the quality of the product. 
A)  the good is elastic with respect to population. 
B)  the good is inelastic with respect to population. 
C)  the good is a fad. 
D)  consumers are misinformed about the quality of the product.

Question 15

Explain why the shape of the demand curve will determine how a shock to the market equilibrium affects price and quantity.

Accepted Answer

A flatter demand curve has a smaller slo

Question 16

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

Accepted Answer

A)  only when p = 10,000. 
B)  only when p = 100. 
C)  always. 
D)  never. 
A)  only when p = 10,000. 
B)  only when p = 100. 
C)  always. 
D)  never.

Question 17

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

Accepted Answer

A)  -1.25. 
B)  -80.0. 
C)  -0.80. 
D)  -10.0. 
A)  -1.25. 
B)  -80.0. 
C)  -0.80. 
D)  -10.0.

Question 18

To prevent obesity,the government may establish a tax on high caloric foods,such as twinkies.A twinkie tax will have the smallest impact on quantity demanded when the demand curve for twinkies is

Accepted Answer

A)  perfectly elastic. 
B)  perfectly inelastic. 
C)  more elastic than the supply curve. 
D)  both A and B. 
A)  perfectly elastic. 
B)  perfectly inelastic. 
C)  more elastic than the supply curve. 
D)  both A and B.

Question 19

If a linear supply curve has a zero intercept,the elasticity of supply is always unitary.

Accepted Answer

A) True 
 B)False

Question 20

The market demand for wheat is Q = 100 - 2p + 1pb,where pb is the price of barley.The cross price elasticity of demand for wheat with respect to barley

Accepted Answer

A)  cannot be calculated from just the information provided. 
B)  is negative. 
C)  suggests that wheat and barley are complements. 
D)  equals 1. 
A)  cannot be calculated from just the information provided. 
B)  is negative. 
C)  suggests that wheat and barley are complements. 
D)  equals 1.

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

If the demand function for orange juice is expressed as Q = 2000 - 500p,where Q is quantity in gallons and p is price per gallon measured in dollars,then the demand for orange juice has a unitary elasticity when price equals

-The above figure shows the demand curve for crude oil.Suppose the price is currently $15.A supply shock suddenly raises the price to $17.What happens with the crude oil sales revenue?

Suppose the demand curve for movie tickets has unitary price elasticity and the supply curve is perfectly price elastic.If 3 million tickets are currently sold at a price of $5,approximately how much tax revenue could the government generate from a $1 specific tax?

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

Explain why the price elasticity of demand changes along a linear demand curve.

A specific tax on sellers will

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,the price elasticity of demand

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.

As more people quit smoking in the United States,what is expected to happen to the price elasticity of supply of cigarettes?

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

Consider the following products.Which of them has the flattest demand curve?

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

Explain why the shape of the demand curve will determine how a shock to the market equilibrium affects price and quantity.

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

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

To prevent obesity,the government may establish a tax on high caloric foods,such as twinkies.A twinkie tax will have the smallest impact on quantity demanded when the demand curve for twinkies is

If a linear supply curve has a zero intercept,the elasticity of supply is always unitary.

The market demand for wheat is Q = 100 - 2p + 1p_b,where p_b is the price of barley.The cross price elasticity of demand for wheat with respect to barley

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

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

If the demand function for orange juice is expressed as Q = 2000 - 500p,where Q is quantity in gallons and p is price per gallon measured in dollars,then the demand for orange juice has a unitary elasticity when price equals

-The above figure shows the demand curve for crude oil.Suppose the price is currently $15.A supply shock suddenly raises the price to $17.What happens with the crude oil sales revenue?

Suppose the demand curve for movie tickets has unitary price elasticity and the supply curve is perfectly price elastic.If 3 million tickets are currently sold at a price of $5,approximately how much tax revenue could the government generate from a $1 specific tax?

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

Explain why the price elasticity of demand changes along a linear demand curve.

A specific tax on sellers will

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

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.

As more people quit smoking in the United States,what is expected to happen to the price elasticity of supply of cigarettes?

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

Consider the following products.Which of them has the flattest demand curve?

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

Explain why the shape of the demand curve will determine how a shock to the market equilibrium affects price and quantity.

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

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

To prevent obesity,the government may establish a tax on high caloric foods,such as twinkies.A twinkie tax will have the smallest impact on quantity demanded when the demand curve for twinkies is

If a linear supply curve has a zero intercept,the elasticity of supply is always unitary.

The market demand for wheat is Q = 100 - 2p + 1pb,where pb is the price of barley.The cross price elasticity of demand for wheat with respect to barley

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

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,the price elasticity of demand

The market demand for wheat is Q = 100 - 2p + 1p_b,where p_b is the price of barley.The cross price elasticity of demand for wheat with respect to barley