Exam 4: Supply and Demand: Elasticity and Applications

During the first year that the Salk vaccine for infantile paralysis became available, the quantity produced was too small to inoculate all those in susceptible age groups.Although the cost of production and the price were not particularly high, production could not be expanded rapidly enough to meet the demand.The government therefore intervened to regulate its distribution.What do these facts suggest about the price of Salk vaccine during the first year it was available? It was:

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

Rank the supply curves in the figure below in order of greatest to least price elasticity at the common intersection point.

The price elasticity of demand is the:

If demand is relatively price inelastic:

Given the supply and demand curves shown in the figure below, a $1 tax on sales should be expected to cause:

A vertical supply curve may be described as:

The government levies an excise tax of 5 cents per unit sold on the sellers in a competitive industry.Both supply and demand curves have some elasticity with respect to price.This tax means that the:

A perfectly price inelastic demand curve must be a vertical line.

A price subsidy of 20 cents per gallon on milk (which does not have a perfectly inelastic demand curve)will result in a:

Economists make a distinction between an increase in supply and an increase in quantity supplied.

An increase in supply will lower price unless:

Sales of the common necessities of life tend to increase sharply when there is a drop in their price.

How is it possible for a corn farmer to have a bumper crop season and yet make less income?

If at a price of $10, quantity bought will be 5400 per day, and at $15, quantity bought will be 4600 per day, then the price elasticity of demand is approximately:

Price elasticity is the same as the slope of the curve.

If you raise your prices on the product you sell, you will always increase total revenue.

Use the following to answer questions : Figure 4-2 -Refer to Figure 4-2 once again.Suppose that now the demand curve has shifted to D'D'.At what point along D'D' is price elasticity equal to 1?

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 C and D?