Question 1

Explain why a tax increase on cigarettes in one state might not lead to a substantial price increase for all consumers in that state.

Accepted Answer

Smuggling of non-taxed cigaret

Question 2

If an increase in income results in a rightward parallel shift of the demand curve,then at any given price,the price elasticity of demand will have

Accepted Answer

A)  increased in absolute terms. 
B)  decreased in absolute terms. 
C)  remained unchanged. 
D)  increased, decreased or stayed the same. It cannot be determined. 
A)  increased in absolute terms. 
B)  decreased in absolute terms. 
C)  remained unchanged. 
D)  increased, decreased or stayed the same. It cannot be determined.

Question 3

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

Accepted Answer

A)  -0.33. 
B)  -3. 
C)  -9. 
D)  -17. 
A)  -0.33. 
B)  -3. 
C)  -9. 
D)  -17.

Question 4

Explain why short-run demand for frozen fish sticks may be more price elastic in the short run than in the long run.

Accepted Answer

Frozen fish sticks can be stor

Question 5

The supply of movie tickets at one theater's box office for this Saturday's 4:30 show of a new movie is

Accepted Answer

A)  perfectly elastic until all seats are filled. 
B)  unit elastic. 
C)  perfectly inelastic. 
D)  elastic. 
A)  perfectly elastic until all seats are filled. 
B)  unit elastic. 
C)  perfectly inelastic. 
D)  elastic.

Question 6

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?

Accepted Answer

A)  Price remains unchanged and quantity increases. 
B)  Price decreases and quantity increases. 
C)  Price decreases and quantity remains unchanged. 
D)  Price and quantity decrease. 
A)  Price remains unchanged and quantity increases. 
B)  Price decreases and quantity increases. 
C)  Price decreases and quantity remains unchanged. 
D)  Price and quantity decrease.

Question 7

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?

Accepted Answer

A)  Equilibrium quantity decreased by three units. 
B)  Equilibrium quantity increased by two units. 
C)  Equilibrium quantity decreased by one unit. 
D)  Equilibrium quantity increased by one unit. 
A)  Equilibrium quantity decreased by three units. 
B)  Equilibrium quantity increased by two units. 
C)  Equilibrium quantity decreased by one unit. 
D)  Equilibrium quantity increased by one unit.

Question 8

Suppose the market for grass seed can be expressed as
Demand: QD = 100 - 2p
Supply: QS = 3p
Price elasticity of supply is constant at 1.If the demand curve is changed to Q = 10 - .2p,price elasticity of demand at any given price is the same as before.Yet,the incidence of a tax falling on consumers will be higher.Why?

Accepted Answer

With the same vertical intercept,the ste

Question 9

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 10

The elasticity of demand for employees is -0.50.It is also estimated that the existing minimum wage (price floor)has increased the raise the wage by 25% above equilibrium wage.How much would the employment change if the price floor was eliminated?

Accepted Answer

A)  Employment would decrease by 12.5%. 
B)  Employment would increase by 12.5%. 
C)  Employment would decrease by 25%. 
D)  Employment would increase by 25%. 
A)  Employment would decrease by 12.5%. 
B)  Employment would increase by 12.5%. 
C)  Employment would decrease by 25%. 
D)  Employment would increase by 25%.

Question 11

Suppose that a specific tax of $3 is imposed on consumers of bread.The bread market supply is Qs = 10 + 0.5P and the bread market demand is Qd = 100-P.What is the consumers' tax burden?

Accepted Answer

A)  Consumers' tax burden is $1.30. 
B)  Consumers' tax burden is $1.00. 
C)  Consumers' tax burden is $1.50. 
D)  Consumers' tax burden is $0.30 
A)  Consumers' tax burden is $1.30. 
B)  Consumers' tax burden is $1.00. 
C)  Consumers' tax burden is $1.50. 
D)  Consumers' tax burden is $0.30

Question 12

Only in the case of perfectly inelastic demand will consumers pay the full amount of a specific tax or ad valorem tax.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A)  equals (-4/100). 
B)  equals (-25). 
C)  equals (-1). 
D)  cannot be calculated without more information. 
A)  equals (-4/100). 
B)  equals (-25). 
C)  equals (-1). 
D)  cannot be calculated without more information.

Question 14

The short-run price elasticity of demand for refrigerators is relatively inelastic.

Accepted Answer

A) True 
 B)False

Question 15

-The above figure shows the demand curve for crude oil.The demand curve has unitary price elasticity when price equals

Accepted Answer

A)  $0. 
B)  $1. 
C)  $10. 
D)  $20. 
A)  $0. 
B)  $1. 
C)  $10. 
D)  $20.

Question 16

The percentage change in the quantity supplied in response to a percentage change in the price is known as the

Accepted Answer

A)  slope of the supply curve. 
B)  excess supply. 
C)  price elasticity of supply. 
D)  All of the above. 
A)  slope of the supply curve. 
B)  excess supply. 
C)  price elasticity of supply. 
D)  All of the above.

Question 17

A vertical supply curve exhibits

Accepted Answer

A)  a constant elasticity of supply. 
B)  a perfectly inelastic supply curve. 
C)  Both A and B are true. 
D)  None of the above. 
A)  a constant elasticity of supply. 
B)  a perfectly inelastic supply curve. 
C)  Both A and B are true. 
D)  None of the above.

Question 18

Suppose the inverse demand curve for a good is expressed as Q = 50 - 2p.If the good currently sells for $3,then the price elasticity of demand is

Accepted Answer

A)  -3 ∗ (2/50). 
B)  -2 ∗ (50/3). 
C)  -2 ∗ (3/44). 
D)  -3 ∗ (44/2). 
A)  -3 ∗ (2/50). 
B)  -2 ∗ (50/3). 
C)  -2 ∗ (3/44). 
D)  -3 ∗ (44/2).

Question 19

Which of the following goods probably has the lowest (absolute value)short-run price elasticity of demand?

Accepted Answer

A)  fresh fruit 
B)  frozen dinners 
C)  cars 
D)  refrigerators 
A)  fresh fruit 
B)  frozen dinners 
C)  cars 
D)  refrigerators

Question 20

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

Accepted Answer

A)  is elastic. 
B)  has a unitary elasticity. 
C)  is inelastic. 
D)  is perfectly inelastic. 
A)  is elastic. 
B)  has a unitary elasticity. 
C)  is inelastic. 
D)  is perfectly inelastic.

Explain why a tax increase on cigarettes in one state might not lead to a substantial price increase for all consumers in that state.

If an increase in income results in a rightward parallel shift of the demand curve,then at any given price,the price elasticity of demand will have

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

Explain why short-run demand for frozen fish sticks may be more price elastic in the short run than in the long run.

The supply of movie tickets at one theater's box office for this Saturday's 4:30 show of a new movie 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?

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?

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

The elasticity of demand for employees is -0.50.It is also estimated that the existing minimum wage (price floor)has increased the raise the wage by 25% above equilibrium wage.How much would the employment change if the price floor was eliminated?

Suppose that a specific tax of $3 is imposed on consumers of bread.The bread market supply is Qs = 10 + 0.5P and the bread market demand is Qd = 100-P.What is the consumers' tax burden?

Only in the case of perfectly inelastic demand will consumers pay the full amount of a specific tax or ad valorem tax.

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

The short-run price elasticity of demand for refrigerators is relatively inelastic.

-The above figure shows the demand curve for crude oil.The demand curve has unitary price elasticity when price equals

The percentage change in the quantity supplied in response to a percentage change in the price is known as the

A vertical supply curve exhibits

Suppose the inverse demand curve for a good is expressed as Q = 50 - 2p.If the good currently sells for $3,then the price elasticity of demand is

Which of the following goods probably has the lowest (absolute value)short-run 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

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

Explain why a tax increase on cigarettes in one state might not lead to a substantial price increase for all consumers in that state.

If an increase in income results in a rightward parallel shift of the demand curve,then at any given price,the price elasticity of demand will have

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

Explain why short-run demand for frozen fish sticks may be more price elastic in the short run than in the long run.

The supply of movie tickets at one theater's box office for this Saturday's 4:30 show of a new movie 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?

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?

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

The elasticity of demand for employees is -0.50.It is also estimated that the existing minimum wage (price floor)has increased the raise the wage by 25% above equilibrium wage.How much would the employment change if the price floor was eliminated?

Suppose that a specific tax of $3 is imposed on consumers of bread.The bread market supply is Qs = 10 + 0.5P and the bread market demand is Qd = 100-P.What is the consumers' tax burden?

Only in the case of perfectly inelastic demand will consumers pay the full amount of a specific tax or ad valorem tax.

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

The short-run price elasticity of demand for refrigerators is relatively inelastic.

-The above figure shows the demand curve for crude oil.The demand curve has unitary price elasticity when price equals

The percentage change in the quantity supplied in response to a percentage change in the price is known as the

A vertical supply curve exhibits

Suppose the inverse demand curve for a good is expressed as Q = 50 - 2p.If the good currently sells for $3,then the price elasticity of demand is

Which of the following goods probably has the lowest (absolute value)short-run 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

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 and the price of barley is $4,the price elasticity of demand