Exam 4: Using Supply and Demand

The elasticity of supply coefficient for bicycles is estimated to be equal to 1.5.It is expected, therefore, that a 4% increase in price would lead to:

Which of the following is true?

Figure 4-E -Beach resorts raise their prices during the summer months and yet more people book rooms at those times.Is this a violation of the law of demand?

Figure 4-E -If consumers were originally willing to buy 500 units of a good at a price of $20 are now willing to buy 500 units of the same good at a price of $10, that change would be described as a decrease in demand.

The major drawback of a price ceiling is:

Assume a price floor is imposed in the wheat market at the equilibrium price and that a price ceiling is imposed in the gasoline market at the equilibrium price.An increase in supply in both the wheat and gasoline markets will create:

Which of the following is most likely to feature inelastic demand with regard to price?

If the supply of good A is perfectly elastic, a decrease in demand will:

Figure 4-E -A technological advance that reduces the cost of producing computers will shift the supply curve of computers to the right.

Table 4-E The schedule below shows the prices that a consumer is willing to pay for pounds of shrimp: Price Per Pound Number of Pounds Consumed Each Year \ 20 1 \ 16 2 \ 12 3 \ 10 4 \ 6 5 \ 2 6 -Refer to Table 4-E.If the price of shrimp is $12 per pound, according to the schedule consumer surplus equals:

Based on the table below, what is the producer surplus of the 1^st unit sold assuming this market reaches equilibrium? \ 1.00 7 1 \ 2.00 6 2 \ 3.00 5 3 \ 4.00 4 4 \ 5.00 3 5 \6 .00 2 6 \ 7.00 1 7

Figure 4-E -When the price of steak falls, we would expect the quantity demanded of steak to rise.

Suppose the equilibrium price of bread is $2.00 per loaf.If the government sets a price ceiling of $1.50 per loaf:

Figure 4-E -According to the law of demand, other things equal, when the price of a good or service falls, demand increases.

If most passenger trains operate far below full capacity and demand is ____, reducing travel fares would be likely to increase total revenue.

Figure 4-E -An increase in the price of ice cream would cause a decrease in the demand for ice cream and an increase in the demand for frozen yogurt, a substitute.

Assume that the elasticities of supply and demand in an industry are both equal to 2 and that it is currently untaxed.A new tax imposed on the industry will:

Say that the equilibrium price of natural gas would be $5 per thousand cubic feet, but there is a price ceiling imposed at $3 per thousand cubic feet.That price ceiling is then lowered to $2 per thousand cubic feet.As a result,

The difference between the value of a good to consumers and its price is known as:

The long-run demand curve for wheat is likely to be: