Question 1

Which of the following statements about agriculture in the U.S.is correct?

Accepted Answer

A) Technological improvements typically increase both supply and revenue for individual farmers. 
B) Technological improvements that increased supply,coupled with inelastic demand for foodstuffs,explain why the number of farmers has decreased dramatically over the last century. 
C) Because technological improvements increase the supply of a product for which demand is inelastic,an individual farmer would be better off not adopting the new technology. 
D) All of the above are correct. 
A) Technological improvements typically increase both supply and revenue for individual farmers. 
B) Technological improvements that increased supply,coupled with inelastic demand for foodstuffs,explain why the number of farmers has decreased dramatically over the last century. 
C) Because technological improvements increase the supply of a product for which demand is inelastic,an individual farmer would be better off not adopting the new technology. 
D) All of the above are correct.

Question 2

If marijuana were legalized,it is likely that there would be an increase in the demand for marijuana.If demand for marijuana is inelastic and the supply of marijuana is perfectly elastic,this will result in

Accepted Answer

A) higher prices and higher total revenue from marijuana sales. 
B) higher prices but lower total revenue from marijuana sales. 
C) the same price and higher total revenue from marijuana sales. 
D) the same price but lower total revenue from marijuana sales. 
A) higher prices and higher total revenue from marijuana sales. 
B) higher prices but lower total revenue from marijuana sales. 
C) the same price and higher total revenue from marijuana sales. 
D) the same price but lower total revenue from marijuana sales.

Question 3

Good news for farming can be bad news for farmers because the

Accepted Answer

A) supply curve for an individual farmer is usually perfectly elastic. 
B) supply curve for an individual farmer is usually perfectly inelastic. 
C) demand for basic foodstuffs is usually inelastic,meaning that factors that shift supply to the right decrease total revenues to sellers. 
D) demand for basic foodstuffs is usually elastic,meaning that factors that shift supply to the right increase total revenues to sellers. 
A) supply curve for an individual farmer is usually perfectly elastic. 
B) supply curve for an individual farmer is usually perfectly inelastic. 
C) demand for basic foodstuffs is usually inelastic,meaning that factors that shift supply to the right decrease total revenues to sellers. 
D) demand for basic foodstuffs is usually elastic,meaning that factors that shift supply to the right increase total revenues to sellers.

Question 4

Scenario 5-3
The supply of aged cheddar cheese is inelastic,and the supply of bread is elastic.Both goods are considered to be normal goods by a majority of consumers.Suppose that a large income tax increase decreases the demand for both goods by 10%.
-Refer to Scenario 5-3.The change in equilibrium price will be

Accepted Answer

A) greater in the aged cheddar cheese market than in the bread market. 
B) greater in the bread market than in the aged cheddar cheese market. 
C) the same in the aged cheddar cheese and bread markets. 
D) Any of the above could be correct. 
A) greater in the aged cheddar cheese market than in the bread market. 
B) greater in the bread market than in the aged cheddar cheese market. 
C) the same in the aged cheddar cheese and bread markets. 
D) Any of the above could be correct.

Question 5

Scenario 5-4
Milk has an inelastic demand,and beef has an elastic demand.Suppose that a mysterious increase in bovine infertility decreases both the population of dairy cows and the population of beef cattle by 50 percent.
-Refer to Scenario 5-4.The change in equilibrium quantity will be

Accepted Answer

A) greater in the milk market than in the beef market. 
B) greater in the beef market than in the milk market. 
C) the same in the milk and beef markets. 
D) Any of the above could be correct. 
A) greater in the milk market than in the beef market. 
B) greater in the beef market than in the milk market. 
C) the same in the milk and beef markets. 
D) Any of the above could be correct.

Question 6

Which of the following statements does not help to explain why government drug interdiction increases drug-related crime?

Accepted Answer

A) The demand for illegal drugs is inelastic. 
B) Interdiction results in drug addicts having a greater need for quick cash. 
C) Interdiction results in an increase in the amount of money needed to buy the same amount of drugs. 
D) Government drug programs are more lenient now with drug offenders than they were in the 1980s. 
A) The demand for illegal drugs is inelastic. 
B) Interdiction results in drug addicts having a greater need for quick cash. 
C) Interdiction results in an increase in the amount of money needed to buy the same amount of drugs. 
D) Government drug programs are more lenient now with drug offenders than they were in the 1980s.

Question 7

How did the farm population in the United States change between 1950 and today?

Accepted Answer

A) It dropped from 10 million to fewer than 3 million people. 
B) It dropped from 20 million to fewer than 5 million people. 
C) It dropped from 30 million to just over 6 million people. 
D) It increased from 10 million to almost 13 million people. 
A) It dropped from 10 million to fewer than 3 million people. 
B) It dropped from 20 million to fewer than 5 million people. 
C) It dropped from 30 million to just over 6 million people. 
D) It increased from 10 million to almost 13 million people.

Question 8

The production of methamphetamine (meth)is a social problem in the Midwest.Iowa is considering two potential programs: Operation Methbust would increase the number of sheriffs' deputies to search out and destroy methamphetamine labs.Operation Say No to Meth would increase the training required of public school teachers so that they could better educate students about the health risks of using meth.Assuming that each program were successful,which of the following statements is correct?

Accepted Answer

A) Both Operation Methbust and Say No would reduce the equilibrium quantity and increase the equilibrium price of meth. 
B) Both Operation Methbust and Say No would increase the equilibrium quantity and reduce the equilibrium price of meth. 
C) Both Operation Methbust and Say No would reduce the equilibrium quantity of meth;Operation Methbust would increase the equilibrium price,whereas Say No would reduce the equilibrium price of meth. 
D) Both Operation Methbust and Say No would reduce the equilibrium price of meth;Operation Methbust would reduce the equilibrium quantity,whereas Say No would increase the equilibrium quantity of meth. 
A) Both Operation Methbust and Say No would reduce the equilibrium quantity and increase the equilibrium price of meth. 
B) Both Operation Methbust and Say No would increase the equilibrium quantity and reduce the equilibrium price of meth. 
C) Both Operation Methbust and Say No would reduce the equilibrium quantity of meth;Operation Methbust would increase the equilibrium price,whereas Say No would reduce the equilibrium price of meth. 
D) Both Operation Methbust and Say No would reduce the equilibrium price of meth;Operation Methbust would reduce the equilibrium quantity,whereas Say No would increase the equilibrium quantity of meth.

Question 9

Which of the following statements is not correct concerning government attempts to reduce the flow of illegal drugs into the country? Drug interdiction

Accepted Answer

A) raises prices and total revenue in the drug market. 
B) can increase drug-related crime. 
C) shifts the demand curve for drugs to the left. 
D) shifts the supply curve of drugs to the left. 
A) raises prices and total revenue in the drug market. 
B) can increase drug-related crime. 
C) shifts the demand curve for drugs to the left. 
D) shifts the supply curve of drugs to the left.

Question 10

Scenario 5-4
Milk has an inelastic demand,and beef has an elastic demand.Suppose that a mysterious increase in bovine infertility decreases both the population of dairy cows and the population of beef cattle by 50 percent.
-Refer to Scenario 5-4.Total consumer spending on milk will

Accepted Answer

A) increase,and total consumer spending on beef will increase. 
B) increase,and total consumer spending on beef will decrease. 
C) decrease,and total consumer spending on beef will increase. 
D) decrease,and total consumer spending on beef will decrease. 
A) increase,and total consumer spending on beef will increase. 
B) increase,and total consumer spending on beef will decrease. 
C) decrease,and total consumer spending on beef will increase. 
D) decrease,and total consumer spending on beef will decrease.

Question 11

The discovery of a new hybrid wheat would increase the supply of wheat.As a result,wheat farmers would realize an increase in total revenue if the

Accepted Answer

A) supply of wheat is elastic. 
B) supply of wheat is inelastic. 
C) demand for wheat is inelastic. 
D) demand for wheat is elastic. 
A) supply of wheat is elastic. 
B) supply of wheat is inelastic. 
C) demand for wheat is inelastic. 
D) demand for wheat is elastic.

Question 12

Which of the following statements helps to explain why government drug interdiction increases drug-related crime?

Accepted Answer

A) The direct impact is on buyers,not sellers. 
B) Successful drug interdiction policies reduce the demand for illegal drugs. 
C) Drug addicts will have an even greater need for quick cash to support their habits. 
D) In the short run,both equilibrium quantities and prices will fall in the markets for illegal drugs. 
A) The direct impact is on buyers,not sellers. 
B) Successful drug interdiction policies reduce the demand for illegal drugs. 
C) Drug addicts will have an even greater need for quick cash to support their habits. 
D) In the short run,both equilibrium quantities and prices will fall in the markets for illegal drugs.

Question 13

A decrease in supply will cause the smallest increase in price when

Accepted Answer

A) both supply and demand are inelastic. 
B) demand is elastic and supply is inelastic. 
C) both supply and demand are elastic. 
D) demand is inelastic and supply is elastic. 
A) both supply and demand are inelastic. 
B) demand is elastic and supply is inelastic. 
C) both supply and demand are elastic. 
D) demand is inelastic and supply is elastic.

Question 14

A decrease in supply will cause the largest increase in price when

Accepted Answer

A) both supply and demand are inelastic. 
B) both supply and demand are elastic. 
C) demand is elastic and supply is inelastic. 
D) demand is inelastic and supply is elastic. 
A) both supply and demand are inelastic. 
B) both supply and demand are elastic. 
C) demand is elastic and supply is inelastic. 
D) demand is inelastic and supply is elastic.

Question 15

If marijuana were legalized,it is likely that there would be an increase in the supply of marijuana.Advocates of marijuana legalization argue that this would significantly reduce the amount of revenue going to the criminal organizations that currently supply marijuana.These advocates believe that the

Accepted Answer

A) supply for marijuana is elastic. 
B) demand for marijuana is elastic. 
C) supply for marijuana is inelastic. 
D) demand for marijuana is inelastic. 
A) supply for marijuana is elastic. 
B) demand for marijuana is elastic. 
C) supply for marijuana is inelastic. 
D) demand for marijuana is inelastic.

Question 16

The supply of oil is likely to be

Accepted Answer

A) inelastic in both the short run and long run. 
B) elastic in both the short run and long run. 
C) elastic in the short run and inelastic in the long run. 
D) inelastic in the short run and elastic in the long run. 
A) inelastic in both the short run and long run. 
B) elastic in both the short run and long run. 
C) elastic in the short run and inelastic in the long run. 
D) inelastic in the short run and elastic in the long run.

Question 17

Which of the following statements about agriculture in the U.S.is correct?

Accepted Answer

A) From the 1950s to today,agricultural output has approximately doubled. 
B) Because technological improvements increase the supply of a product for which demand is inelastic,an individual farmer would be better off not adopting the new technology. 
C) Increasing the supply of agricultural products typically benefits consumers but harms farmers. 
D) Technological improvements typically increase both supply and revenue for individual farmers. 
A) From the 1950s to today,agricultural output has approximately doubled. 
B) Because technological improvements increase the supply of a product for which demand is inelastic,an individual farmer would be better off not adopting the new technology. 
C) Increasing the supply of agricultural products typically benefits consumers but harms farmers. 
D) Technological improvements typically increase both supply and revenue for individual farmers.

Question 18

Suppose researchers at the University of Wisconsin discover a new vitamin that increases the milk production of dairy cows.If the demand for milk is relatively inelastic,the discovery will

Accepted Answer

A) raise both price and total revenues. 
B) lower both price and total revenues. 
C) raise price and lower total revenues. 
D) lower price and raise total revenues. 
A) raise both price and total revenues. 
B) lower both price and total revenues. 
C) raise price and lower total revenues. 
D) lower price and raise total revenues.

Question 19

Because the demand for wheat tends to be inelastic,the development of a new,more productive hybrid wheat would tend to

Accepted Answer

A) increase the total revenue of wheat farmers. 
B) decrease the total revenue of wheat farmers. 
C) decrease the demand for wheat. 
D) decrease the supply of wheat. 
A) increase the total revenue of wheat farmers. 
B) decrease the total revenue of wheat farmers. 
C) decrease the demand for wheat. 
D) decrease the supply of wheat.

Question 20

There are fewer farmers in the United States today than 200 years ago because of

Accepted Answer

A) improvements in farm technology. 
B) increased government regulations in farming. 
C) an elastic demand for food. 
D) environmental programs designed to reduce soil erosion. 
A) improvements in farm technology. 
B) increased government regulations in farming. 
C) an elastic demand for food. 
D) environmental programs designed to reduce soil erosion.

Exam 5:Elasticity and Its Applications: Three Applications of Supply,demand,and Elasticity

Which of the following statements about agriculture in the U.S.is correct?

If marijuana were legalized,it is likely that there would be an increase in the demand for marijuana.If demand for marijuana is inelastic and the supply of marijuana is perfectly elastic,this will result in

Good news for farming can be bad news for farmers because the

Scenario 5-4 Milk has an inelastic demand,and beef has an elastic demand.Suppose that a mysterious increase in bovine infertility decreases both the population of dairy cows and the population of beef cattle by 50 percent. -Refer to Scenario 5-4.The change in equilibrium quantity will be

Which of the following statements does not help to explain why government drug interdiction increases drug-related crime?

How did the farm population in the United States change between 1950 and today?

Which of the following statements is not correct concerning government attempts to reduce the flow of illegal drugs into the country? Drug interdiction

Scenario 5-4 Milk has an inelastic demand,and beef has an elastic demand.Suppose that a mysterious increase in bovine infertility decreases both the population of dairy cows and the population of beef cattle by 50 percent. -Refer to Scenario 5-4.Total consumer spending on milk will

The discovery of a new hybrid wheat would increase the supply of wheat.As a result,wheat farmers would realize an increase in total revenue if the

Which of the following statements helps to explain why government drug interdiction increases drug-related crime?

A decrease in supply will cause the smallest increase in price when

A decrease in supply will cause the largest increase in price when

The supply of oil is likely to be

Which of the following statements about agriculture in the U.S.is correct?

Suppose researchers at the University of Wisconsin discover a new vitamin that increases the milk production of dairy cows.If the demand for milk is relatively inelastic,the discovery will

Because the demand for wheat tends to be inelastic,the development of a new,more productive hybrid wheat would tend to

There are fewer farmers in the United States today than 200 years ago because of

Ten Principles of Economics

Ten Principles of Economics: How People Make Decisions

Ten Principles of Economics: How People Interact

Ten Principles of Economics: How the Economy As a Whole Works

Ten Principles of Economics: Part A

Ten Principles of Economics: Part B

Thinking Like an Economist

Thinking Like an Economist: The Economist As Scientist

Thinking Like an Economist: The Economist As Policy Adviser

Thinking Like an Economist: Why Economists Disagree

Thinking Like an Economist: Lets Get Going

Thinking Like an Economist: Graphing a Brief Review

Thinking Like an Economist: Part A

Thinking Like an Economist: Part B

Interdependence and the Gains From Trade

Interdependence and the Gains From Trade: A Parable for the Modern Economy

Interdependence and the Gains From Trade: Comparative Advantage the Driving Force of Specialization

Interdependence and the Gains From Trade: Applications of Comparative Advantage

Interdependence and the Gains From Trade: Conclusion

Interdependence and the Gains From Trade: Part A

Interdependence and the Gains From Trade: Part B

The Market Forces of Supply and Demand

The Market Forces of Supply and Demand:Markets and Competition

The Market Forces of Supply and Demand: Demand

The Market Forces of Supply and Demand: Supply

The Market Forces of Supply and Demand: Supply and Demand Together

The Market Forces of Supply and DemandConclusion How Prices Allocate Resources

The Market Forces of Supply and Demand: Part A

The Market Forces of Supply and Demand: Part B

Elasticity and Its Applications

Elasticity and Its Applications: The Elasticity of Demand

Elasticity and Its Applications: The Elasticity of Supply

Elasticity and Its Applications: Part A

Elasticity and Its Applications: Part B

Supply Demand and Government Policies

Supply Demand and Government Policies: Controls on Prices

Supply Demand and Government Policies: Taxes

Supply Demand and Government Policies: Part A

Supply Demand and Government Policies: Part B

Consumers Producers and the Efficiency of Markets

Consumers Producers and the Efficiency of Markets: Consumer Surplus

Consumers Producers and the Efficiency of Markets: Producer Surplus

Consumers Producers and the Efficiency of Markets: Market Efficiency

Consumers Producers and the Efficiency of Markets: Conclusion Market Efficiency and Market Failure

Consumers Producers and the Efficiency of Markets: Part A

Consumers Producers and the Efficiency of Markets: Part B

Application the Cost of Taxation

Application the Cost of Taxation: The Deadweight Loss of Taxation

Application the Cost of Taxation: The Determinants of the Deadweight Loss

Application the Cost of Taxation: Deadweight Loss and Tax Revenue As Taxes Vary

Application the Cost of Taxation: Conclusion

Application the Cost of Taxation: Part A

Application the Cost of Taxation: Part B

Application International Trade

Application International Trade: The Determinants of Trade

Application International Trade: The Winners and Losers From Trade

Application International Trade: The Arguments for Restricting Trade

Application International Trade: Conclusion

Application International Trade: Part A

Application International Trade: Part B

Measuring a Nations Income

Measuring a Nations Income: The Economy's Income and Expenditure