Question 1

Suppose the demand curve is perfectly inelastic and the supply curve is upward sloping.The price sellers receive after a specific tax is imposed on sellers

Accepted Answer

A)  is less than before the tax. 
B)  is higher than before the tax. 
C)  is unchanged. 
D)  depends on the supply elasticity. 
A)  is less than before the tax. 
B)  is higher than before the tax. 
C)  is unchanged. 
D)  depends on the supply elasticity.

Question 2

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 3

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?

Accepted Answer

A)  Linda will have a less elastic response than Sam. 
B)  Sam will have a less elastic response than Linda. 
C)  Sam and Linda will have identically elastic responses. 
D)  Sam will have a more elastic response than Linda. 
A)  Linda will have a less elastic response than Sam. 
B)  Sam will have a less elastic response than Linda. 
C)  Sam and Linda will have identically elastic responses. 
D)  Sam will have a more elastic response than Linda.

Question 4

The price elasticity of demand

Accepted Answer

A)  depends on the units in which quantity is measured. 
B)  depends on the units in which price is measured. 
C)  depends on the units in which money is measured. 
D)  is independent of the units in which quantity and price are measured. 
A)  depends on the units in which quantity is measured. 
B)  depends on the units in which price is measured. 
C)  depends on the units in which money is measured. 
D)  is independent of the units in which quantity and price are measured.

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

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

Question 7

The price elasticity of supply when the supply curve is Q = 5 is

Accepted Answer

A)  5. 
B)  perfectly inelastic. 
C)  perfectly elastic. 
D)  Cannot be calculated from the information provided. 
A)  5. 
B)  perfectly inelastic. 
C)  perfectly elastic. 
D)  Cannot be calculated from the information provided.

Question 8

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 9

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 10

As the demand for corn increases to provide input for ethanol production,what is expected to happen to the price elasticity of corn supply?

Accepted Answer

A)  It will decrease. 
B)  It will become zero. 
C)  It will increase. 
D)  It will not change. 
A)  It will decrease. 
B)  It will become zero. 
C)  It will increase. 
D)  It will not change.

Question 11

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 12

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 13

The cross price elasticity of demand between two goods will be positive if

Accepted Answer

A)  the two goods are complements. 
B)  the two goods are substitutes. 
C)  the two goods are luxuries. 
D)  one of the goods is a luxury and the other is a necessity. 
A)  the two goods are complements. 
B)  the two goods are substitutes. 
C)  the two goods are luxuries. 
D)  one of the goods is a luxury and the other is a necessity.

Question 14

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

Accepted Answer

A)  supply is price elastic at all prices. 
B)  supply is price inelastic at all prices. 
C)  supply is elastic only at prices below 20. 
D)  No general statements about price elasticity of supply can be made. 
A)  supply is price elastic at all prices. 
B)  supply is price inelastic at all prices. 
C)  supply is elastic only at prices below 20. 
D)  No general statements about price elasticity of supply can be made.

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 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 17

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 18

The supply curve for tickets for a sporting event

Accepted Answer

A)  is perfectly inelastic. 
B)  is vertical. 
C)  has a price elasticity of zero. 
D)  All of the above. 
A)  is perfectly inelastic. 
B)  is vertical. 
C)  has a price elasticity of zero. 
D)  All of the above.

Question 19

A horizontal demand curve for a good could arise because consumers

Accepted Answer

A)  are irrational. 
B)  are not sensitive to price changes. 
C)  view this good as identical to another good. 
D)  have no equivalent substitutes for this good. 
A)  are irrational. 
B)  are not sensitive to price changes. 
C)  view this good as identical to another good. 
D)  have no equivalent substitutes for this good.

Question 20

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

Accepted Answer

A)  these two products are relatively elastic substitutes. 
B)  these two products are relatively inelastic substitutes. 
C)  these two products are relatively elastic complements. 
D)  these two products are relatively inelastic complements. 
A)  these two products are relatively elastic substitutes. 
B)  these two products are relatively inelastic substitutes. 
C)  these two products are relatively elastic complements. 
D)  these two products are relatively inelastic complements.

Suppose the demand curve is perfectly inelastic and the supply curve is upward sloping.The price sellers receive after a specific tax is imposed on sellers

A vertical supply curve exhibits

The price elasticity of demand

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

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

The price elasticity of supply when the supply curve is Q = 5 is

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

As the demand for corn increases to provide input for ethanol production,what is expected to happen to the price elasticity of corn supply?

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

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

The cross price elasticity of demand between two goods will be positive if

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

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

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?

The supply curve for tickets for a sporting event

A horizontal demand curve for a good could arise because consumers

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

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

Suppose the demand curve is perfectly inelastic and the supply curve is upward sloping.The price sellers receive after a specific tax is imposed on sellers

A vertical supply curve exhibits

The price elasticity of demand

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

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

The price elasticity of supply when the supply curve is Q = 5 is

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

As the demand for corn increases to provide input for ethanol production,what is expected to happen to the price elasticity of corn supply?

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

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

The cross price elasticity of demand between two goods will be positive if

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

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

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?

The supply curve for tickets for a sporting event

A horizontal demand curve for a good could arise because consumers

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

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