Exam 4: Using Supply and Demand

Serious natural disasters like hurricanes and tornadoes cause widespread and extensive damage to buildings.As a result of a natural disaster, what would you expect to happen in the market for building supplies?

Fantastic Cuts Hair Salon knows that a 15% increase in the price of their haircuts will result in a 5% decrease in the number of haircuts sold.What is the elasticity of demand facing Fantastic Cuts?

Figure 4-E -If hot dogs are inferior goods, the demand for hot dogs will rise as consumer income falls.

Minimum wage laws have little or no effect in this segment.

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 in the schedule consumer surplus equals $34, the market price of a pound of shrimp must be:

Demand is said to be ____ when the quantity demanded is very responsive to changes in price.

If the government wanted a tax to raise a great deal of revenue but not burden producers much, it would want to tax an industry with

Exhibit 4-B -Refer to Exhibit 4-B.The graph that best illustrates a perfectly elastic demand curve is

A "war on drugs" is waged, and, as a result, a larger quantity of drugs flowing into the United States is seized and more drug traffickers are arrested.If demand for drugs is inelastic, one would expect the total expenditure on drugs to:

Figure 4-E -Markets tend toward equilibrium and, as a result, will tend to eliminate shortages and surpluses.Why?

If makers of snake antivenom implement significant price increases, it is unlikely to significantly affect the use of antivenom for treating poisonous snakebites.The demand for antivenom among users is:

Table 4-A Use the following information about demand and supply schedules to answer the question. Price \ 12 5 9 19 14 \ 10 8 12 17 12 \ 8 11 15 15 10 \ 6 13 18 13 8 \ 4 16 21 11 6 \ 2 18 24 9 4 -Refer to Table 4-A.Suppose that D₁ and S₂ are the demand and supply schedules for Product A.If the government imposes a price ceiling of $10:

Figure 4-E -An increase in the price of Product X leads to a decrease in demand for Product Y.The price increase also increases the demand for Product Z, a related good.Discuss the relationship between these products.

Put the following products in order from the least to the most elastic demand: Domino's pizza, pizza, and pizza from Domino's on the corner of Main Street and 8th Avenue.

Explain how both sales and long lines prior to store openings are characteristic of markets in disequilibrium.

Figure 4-D -Refer to Figure 4-D.When the price falls from P₂ to P₁, consumer surplus

Which of the following is the most important determinant of the elasticity of supply?

Supply is said to be ____ when the quantity supplied is very responsive to changes in price.

Assume the price of widgets increases by 22 percent and the quantity supplied increases by 27 percent as a result.The elasticity of supply coefficient is:

If the demand curve for a product is horizontal, then the elasticity of demand is: