Exam 5: Elasticity and Its Application

A recent news report lamented the plight of corn farmers in Wisconsin due to a severe drought. Which of the following best describes the effect on corn farmers in Minnesota, where sufficient rainfall occurred?

A good will have a more inelastic demand, the

The price elasticity of supply along a typical supply curve is

If the demand for bananas is elastic, then an increase in the price of bananas will

While in college, Marty and Laura each buy 15 bus tickets per month. After they graduate and have full-time jobs, Marty buys 0 bus tickets per month and Laura buys 28 bus tickets per month. Comparing income elasticity of demand for bus tickets, Marty's

Under which of the following conditions would the interdiction of illegal drugs result in a decrease in the quantity of drugs sold and in a decrease in total spending on illegal drugs by drug users?

If the price elasticity of demand for a good is 1, then a 3 percent decrease in price results in a

The cross-price elasticity of demand can tell us whether goods are

Figure 5-15 -Refer to Figure 5-15. Along which of these segments of the supply curve is supply least elastic?

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

The OPEC oil cartel has difficulty maintaining high prices in the long run because the supply of oil is more inelastic in the long run than in the short run.

Holding all other factors constant and using the midpoint method, if a tractor manufacturer increases production from 80 to 100 units when price increases by 15 percent, then supply is

Which of the following statements is valid when supply is perfectly elastic at a price of $4?

In the case of perfectly inelastic demand,

Table 5-10 -Refer to Table 5-10. Using the midpoint method, which of the three supply curves has the most elastic price elasticity of supply?

The cross-price elasticity of demand for bacon and eggs likely would be negative because bacon and eggs are complements for many people.

Figure 5-11 -Refer to Figure 5-11. A decrease in price from $20 to $10 leads to a

Economists compute the price elasticity of demand as the

When her income increased from $10,000 to $20,000, Heather's consumption of macaroni decreased from 10 pounds to 5 pounds and her consumption of soy-burgers increased from 2 pounds to 4 pounds. We can conclude that for Heather, macaroni

Drug interdiction, which reduces the supply of drugs, will likely be a less effective policy than educating consumers to reduce their demand for drugs because the drug interdiction policy will lower drug prices and reduce the quantity of drugs demanded.