Exam 4: Supply and Demand: Elasticity and Applications

Use the following to answer questions : Figure 4-3 -If the government then decides to set a price floor of $20 for the market in Figure 4-3, there is excess supply and 60 units of goods will be purchased.

During the summer of 1978, the airlines had a large increase in revenues after introducing a large number of bargain fares.Which of the following is a possible explanation?

If at a price of $8, the quantity of movie tickets bought will be 3300 per day, and at $12, the ticket quantity bought will be 2700 per day, then the price elasticity of demand for movie tickets is approximately:

What is meant by "the incidence of the tax"?

An increased government excise tax on liquor will NOT affect liquor consumption if:

Use the following to answer questions : Figure 4-2 -Refer to Figure 4-2.What is the elasticity of the demand curve DD between points B and C?

An increase in cigarette taxes can lead to fewer packs being smoked.

The government has declared that they will purchase every bushel of wheat you can produce, at the price of $15 per bushel.Which of the diagrams shows the government's demand curve?

Suppose that a large city is investigating the elimination of rent controls on housing at a time when the vacancy rate is extremely low-only 1 percent of all apartments in the city are vacant.Which of the following is most likely to occur if rent controls are eliminated?

"If its advocates are correct, the minimum-wage bill passed by the House of Representatives would raise wages for nearly 7 million underpaid workers, but would have no noticeable effect on employment." The quotation implies that the demand for the labor services of the 7 million workers mentioned, with respect to the price of labor services, has elasticity equal to:

In general, supply curves become less elastic the longer the time period under consideration.

The government declares that it is prepared to sell any and all cotton yard goods from its surpluses to domestic purchasers at a price of $2 per yard.Which-if any-of the four panels in the figure below could be used as shown to illustrate this government supply situation?

If the government imposes higher taxes on oil the producers may have to pay part of it.

A straight-line supply curve has a price elasticity equal to 1 everywhere along it.

Society can easily fulfill everyone's desires, we just need government to step in and help out.

Which of the following might explain why farm revenues are higher in years of lower production due to bad weather?

A horizontal demand curve may be described as:

Use the following to answer questions : Figure 4-4 -Suppose the government decides to impose a $20.00 per unit, sales tax shifting the supply curve in Figure 4-4 up to S'S'.Since the suppliers have the more inelastic supply curve, the suppliers bear a greater burden of the sales tax.

Use the following to answer questions : Figure 4-3 -If, for the market depicted in Figure 4-3, the government sets a price ceiling of $25, then the market can't adjust and there is excess supply.

A shift to the left of the demand curve for X together with a shift to the right of the supply curve for X tends to: