Exam 3: Applying the Supply and Demand Model

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.

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Question 1

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When a good has an elastic demand,a one percent decrease in the price will result in a greater than one percent increase in the quantity demanded.Thus,the price multiplied by the quantity will increase when the price declines by one percent.

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

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Question 2

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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.

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Question 3

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Elasticity = slope (p/Q),-0.2 = slope (3/2).
The slope equals -0.133.
Thus,Q = a - 0.133p or 2 = a - 0.133(3).
Solving yields a = 2.399.The demand curve is Q = 2.399 - 0.133p (where Q is expressed in million gallons).

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

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Question 4

If a government wants to maximize revenues from a tax it should

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Question 5

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?

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Question 6

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

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Question 7

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?

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Question 8

-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?

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Question 9

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

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Question 10

In the case of a linear demand curve,demand becomes more price elastic as price increases.

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Question 11

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

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Question 12

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

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Question 13

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

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Question 14

Who will bear the burden of a $0.05 tax placed on soda suppliers (consumer or seller)in a soda market where Qd = 225-10P and Qs = 50 + 15P?

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Question 15

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

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Question 16

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

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Question 17

Which good would you expect to have a greater price elasticity: a gallon of gasoline sold at a specific gasoline station on Main Street in Phoenix,a gallon of gasoline sold in Phoenix,or a gallon of gasoline sold in Arizona? Why?

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Question 18

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

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Question 19

When comparing elasticities between two different linear demand curves,the curve that is flatter has greater price elasticity at every given price.

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Question 20

Showing 1 - 20 of 114

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.

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

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.

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

If a government wants to maximize revenues from a tax it should

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 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?

-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?

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

In the case of a linear demand curve,demand becomes more price elastic as price increases.

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

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

Who will bear the burden of a $0.05 tax placed on soda suppliers (consumer or seller)in a soda market where Qd = 225-10P and Qs = 50 + 15P?

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

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

Which good would you expect to have a greater price elasticity: a gallon of gasoline sold at a specific gasoline station on Main Street in Phoenix,a gallon of gasoline sold in Phoenix,or a gallon of gasoline sold in Arizona? Why?

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

When comparing elasticities between two different linear demand curves,the curve that is flatter has greater price elasticity at every given price.

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 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.

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

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.

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

If a government wants to maximize revenues from a tax it should

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

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?

-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?

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

In the case of a linear demand curve,demand becomes more price elastic as price increases.

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

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

Who will bear the burden of a $0.05 tax placed on soda suppliers (consumer or seller)in a soda market where Qd = 225-10P and Qs = 50 + 15P?

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

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

Which good would you expect to have a greater price elasticity: a gallon of gasoline sold at a specific gasoline station on Main Street in Phoenix,a gallon of gasoline sold in Phoenix,or a gallon of gasoline sold in Arizona? Why?

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

When comparing elasticities between two different linear demand curves,the curve that is flatter has greater price elasticity at every given price.

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