Exam 3: Applying the Supply-And-Demand Model

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?

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

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 cross-price elasticity of demand

The tax incidence of a specific tax or ad valorem tax is influenced by

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?

The elasticity of supply of rental units in New York City is estimated to be about 0.10.Current price restrictions (price floors)are estimated to decrease the price of rental units by 10% below equilibrium price.By how much would price and quantity supplied change if the price floors were removed from the rental unit market in New York City?

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

If the cross price elasticity of two goods is -3.5,then

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

For a given positively sloped supply curve,the price increase to consumers resulting from a specific tax imposed on sellers will be

Explain why when the demand curve for a good is elastic,a one percent reduction in the price of the good will increase a consumer's expenditure on the good.

In the case of a specific tax,tax incidence is independent of who pays

The price elasticity of demand

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 change in price that results from a leftward shift of the supply curve will be greater if

If the price of orange juice rises 10%,and as a result the quantity demanded falls by 10%,then one can conclude that the demand for orange juice

If the supply curve of cigarettes shifts to the left,quantity demanded for cigarettes

The supply curve for tickets for a sporting event

The price elasticity of demand for gasoline is estimated to be -0.2.Two million gallons are sold daily at a price of $3.Use this information to calculate a demand curve for gasoline assuming it is linear.

If the supply curve for orange juice is estimated to be Q = 40 + 2p,then