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 $5 specific tax to be collected from sellers,what is the price consumers will pay? How much tax revenue is collected? What fraction is paid by sellers?

One reason the U.S.government might subsidize research of an alternative to crude-oil based gasoline is that

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

If the price elasticity of demand for a good is greater than one in absolute value,economists characterize that demand is

Suppliers with a high supply elasticity will bear a ______ tax incidence,while suppliers with a low supply elasticity will bear a ______ tax incidence.

The short-run elasticity of supply is less than the long-run elasticity of supply

-The above figure shows three demand curves labeled D₁,D₂,and D₃.Rank these three demand curves in terms of elasticity at a price of c.

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

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

Assume the market demand for wheat may be written as Q = 45 - 2p + 0.3Y + 1pb where Y refers to income and pb refers to the price of barley.Assuming that wheat and barley both sell for $1,and income is $20,calculate the price elasticity,cross price elasticity and income elasticity for wheat.

If the government decides to levy an ad valorem tax on product with a perfectly inelastic supply.The consumers tax incidence will be

If the price elasticity of demand for a good is less than one in absolute value,economists would characterize consumers of this good

The cross price elasticity of demand for a good x is the percentage change in the quantity demanded of good x in response to a given percentage change in

Suppose the market for grass seed can be expressed as Demand: Q^D = 200 - 5p Supply: Q^S = 40 + 5p If the government collects a $5 specific tax from sellers,how much will the quantity demanded change from the amount demanded before the tax? What price will consumers pay after the tax? What price will sellers receive after the tax? What is the tax revenue?

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

Which of the following is an example of an ad valorem tax?

On a linear demand curve,the lower the price,

A vertical demand curve results in

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

If the demand curve for a good is horizontal and the price is positive,then a leftward shift of the supply curve results in