Question 1

Explain whether you would expect the elasticity of supply to be highly elastic or inelastic for fresh cut flowers and why.

Accepted Answer

The elasticity of supply is ve...

Question 2

A rightward shift of the demand curve will lead to an

Accepted Answer

A)   increase in equilibrium price.
B)   excess demand at the old equilibrium price.
C)   increase in quantity supplied.
D)   All of the above.

Question 3

Costs that pertain to finding a trading partner and making a trade are called

Accepted Answer

A)   transaction costs.
B)   transgression costs.
C)   consumption costs.
D)   transaction taxes.

Question 4

The U.S.is planning on imposing quotas on tires imported from china.Domestic retailers predict this will result in an increase in consumer prices on tires by about $10.Use a supply and demand graph with brief explanation to show the effects of an import quota.Assume the quota is binding.

Accepted Answer

The restriction on imports wil...

Question 5

Suppose a market is supplied by domestic producers and and an international supply.The domestic (inverse)supply curve is given by the p=5+2Q,and the foreign supply curve is given by p=15.Draw the total supply curve.On a second graph,draw the total supply curve if the government imposes a quota of 10 on foreign supply.

Accepted Answer

Without a quota,the supply cur...

Question 6

The local lemon market has the following supply and demand relationships:
QD = 100 - 5p - pₒ + 2I
QS = 4p
where p is the price of lemons (per pound),Q is the quantity of lemons in pounds,I is the average consumer income,and pₒ is the price per pound of oranges.Derive the equilibrium price and quantity of lemons as functions of the price of oranges and average consumer income.Use the calculus method of comparative statics to compute the effects of income and the price of oranges on the equilibrium price and quantity of lemons.

Accepted Answer

Find equilibrium price by setting supply...

Question 7

The cross price elasticity of demand between two goods will be positive if

Accepted Answer

A)   the two goods are complements.
B)   the two goods are substitutes.
C)   the two goods are luxuries.
D)   one of the goods is a luxury and the other is a necessity.

Question 8

If the supply curve for orange juice is estimated to be Q = 40 + 2p,then

Accepted Answer

A)   supply is price elastic at all prices.
B)   supply is price inelastic at all prices.
C)   supply is elastic only at prices below 20.
D)   No general statements about price elasticity of supply can be made.

Question 9

Which of the following goods probably has the lowest (absolute value) short-run price elasticity of demand?

Accepted Answer

A)   fresh fruit
B)   frozen dinners
C)   cars
D)   refrigerators

Question 10

Compute the elasticity of demand for the demand curve p = 15Q⁻⁰.⁷.Does the elasticity vary with the price?

Accepted Answer

For constant elasticity demand...

Question 11

A drought in the Midwest will raise the price of wheat because of a

Accepted Answer

A)   leftward shift in the supply curve.
B)   rightward shift in the supply curve.
C)   leftward shift in the demand curve.
D)   rightward shift in the demand curve.

Question 12

For the following, please answer "True" or "False" and explain why.
-When comparing elasticities between two different linear demand curves,the curve that is flatter has greater price elasticity at every given price.

Accepted Answer

A) True 
 B)False

Question 13

When "rent controls" result in a shortage of housing,landlords

Accepted Answer

A)   use criteria other than price to allocate housing.
B)   lower the price to allocate the housing.
C)   attempt to attract renters.
D)   None of the above.

Question 14

The demand for labor is given by L(w)=1000 -.5w,where w is the minimum wage.Find the level of w that maximizes the total wage payment,wL(w).What is the wage-elasticity of labor demand at the maximizing minimum wage?

Accepted Answer

We maximize w(1000 - .5w),whic...

Question 15

A vertical demand curve results in

Accepted Answer

A)   no change in quantity when the supply curve shifts.
B)   no change in price when the supply curve shifts.
C)   no change in the supply curve being possible.
D)   no change in quantity when the demand curve shifts.

Question 16

-The above figure shows three different supply-and-demand graphs.Which graph best represents the market for the air we are currently breathing?

Accepted Answer

A)   Graph A
B)   Graph B
C)   Graph C
D)   None of the above.

Question 17

If an increase in income results in a rightward parallel shift of the demand curve,then at any given price,the price elasticity of demand will have

Accepted Answer

A)   increased in absolute terms.
B)   decreased in absolute terms.
C)   remained unchanged.
D)   increased, decreased or stayed the same. It cannot be determined.

Question 18

Suppose the demand curve for a good shifts rightward,causing the equilibrium price to increase.This increase in the price of the good results in

Accepted Answer

A)   a rightward shift of the supply curve.
B)   an increase in quantity supplied.
C)   a leftward shift of the supply curve.
D)   a downward movement along the supply curve.

Question 19

The market demand for wheat is Q = 100 - 2p + 1pb,where pb is the price of barley.The cross price elasticity of demand for wheat with respect to barley

Accepted Answer

A)   cannot be calculated from just the information provided.
B)   is negative.
C)   suggests that wheat and barley are complements.
D)   equals 1.

Question 20

If the government decides to levy an ad valorem tax on product with a perfectly inelastic supply.The consumers tax incidence will be

Accepted Answer

A)   0.
B)   1.
C)   .5.
D)   Cannot be determined.

Exam 2: Supply and Demand

If an increase in income results in a rightward parallel shift of the demand curve,then at any given price,the price elasticity of demand will have

Correct Answer
verified

Correct Answer
verified
Find equilibrium price by setting supply...
View Answer

Suppose the demand curve for a good shifts rightward,causing the equilibrium price to increase.This increase in the price of the good results in

Correct Answer
verified

The U.S.is planning on imposing quotas on tires imported from china.Domestic retailers predict this will result in an increase in consumer prices on tires by about $10.Use a supply and demand graph with brief explanation to show the effects of an import quota.Assume the quota is binding.

Correct Answer
verified
The restriction on imports wil...
View Answer

Correct Answer
verified
Without a quota,the supply cur...
View Answer

If the supply curve for orange juice is estimated to be Q = 40 + 2p,then

Correct Answer
verified

A drought in the Midwest will raise the price of wheat because of a

Correct Answer
verified

The cross price elasticity of demand between two goods will be positive if

Correct Answer
verified

Which of the following goods probably has the lowest (absolute value) short-run price elasticity of demand?

Correct Answer
verified

The market demand for wheat is Q = 100 - 2p + 1pb,where pb is the price of barley.The cross price elasticity of demand for wheat with respect to barley

Correct Answer
verified

When "rent controls" result in a shortage of housing,landlords

Correct Answer
verified

A vertical demand curve results in

Correct Answer
verified

Compute the elasticity of demand for the demand curve p = 15Q⁻⁰.⁷.Does the elasticity vary with the price?

Correct Answer
verified
For constant elasticity demand...
View Answer

The demand for labor is given by L(w)=1000 -.5w,where w is the minimum wage.Find the level of w that maximizes the total wage payment,wL(w).What is the wage-elasticity of labor demand at the maximizing minimum wage?

Correct Answer
verified
We maximize w(1000 - .5w),whic...
View Answer

Costs that pertain to finding a trading partner and making a trade are called

Correct Answer
verified

If the government decides to levy an ad valorem tax on product with a perfectly inelastic supply.The consumers tax incidence will be

Correct Answer
verified

A rightward shift of the demand curve will lead to an

Correct Answer
verified

Explain whether you would expect the elasticity of supply to be highly elastic or inelastic for fresh cut flowers and why.

Correct Answer
verified
The elasticity of supply is ve...
View Answer

For the following, please answer "True" or "False" and explain why. -When comparing elasticities between two different linear demand curves,the curve that is flatter has greater price elasticity at every given price.

Correct Answer
verified

-The above figure shows three different supply-and-demand graphs.Which graph best represents the market for the air we are currently breathing?

Correct Answer
verified

Exam 2: Supply and Demand

If an increase in income results in a rightward parallel shift of the demand curve,then at any given price,the price elasticity of demand will have

Correct AnswerverifiedShow Answer

Correct AnswerverifiedFind equilibrium price by setting supply...View AnswerShow Answer

Suppose the demand curve for a good shifts rightward,causing the equilibrium price to increase.This increase in the price of the good results in

Correct AnswerverifiedShow Answer

The U.S.is planning on imposing quotas on tires imported from china.Domestic retailers predict this will result in an increase in consumer prices on tires by about $10.Use a supply and demand graph with brief explanation to show the effects of an import quota.Assume the quota is binding.

Correct AnswerverifiedThe restriction on imports wil...View AnswerShow Answer

Correct AnswerverifiedWithout a quota,the supply cur...View AnswerShow Answer

If the supply curve for orange juice is estimated to be Q = 40 + 2p,then

Correct AnswerverifiedShow Answer

A drought in the Midwest will raise the price of wheat because of a

Correct AnswerverifiedShow Answer

The cross price elasticity of demand between two goods will be positive if

Correct AnswerverifiedShow Answer

Which of the following goods probably has the lowest (absolute value) short-run price elasticity of demand?

Correct AnswerverifiedShow Answer

The market demand for wheat is Q = 100 - 2p + 1pb,where pb is the price of barley.The cross price elasticity of demand for wheat with respect to barley

Correct AnswerverifiedShow Answer

When "rent controls" result in a shortage of housing,landlords

Correct AnswerverifiedShow Answer

A vertical demand curve results in

Correct AnswerverifiedShow Answer

Compute the elasticity of demand for the demand curve p = 15Q⁻⁰.⁷.Does the elasticity vary with the price?

Correct AnswerverifiedFor constant elasticity demand...View AnswerShow Answer

The demand for labor is given by L(w)=1000 -.5w,where w is the minimum wage.Find the level of w that maximizes the total wage payment,wL(w).What is the wage-elasticity of labor demand at the maximizing minimum wage?

Correct AnswerverifiedWe maximize w(1000 - .5w),whic...View AnswerShow Answer

Costs that pertain to finding a trading partner and making a trade are called

Correct AnswerverifiedShow Answer

If the government decides to levy an ad valorem tax on product with a perfectly inelastic supply.The consumers tax incidence will be

Correct AnswerverifiedShow Answer

A rightward shift of the demand curve will lead to an

Correct AnswerverifiedShow Answer

Explain whether you would expect the elasticity of supply to be highly elastic or inelastic for fresh cut flowers and why.

Correct AnswerverifiedThe elasticity of supply is ve...View AnswerShow Answer

For the following, please answer "True" or "False" and explain why. -When comparing elasticities between two different linear demand curves,the curve that is flatter has greater price elasticity at every given price.

Correct AnswerverifiedShow Answer

-The above figure shows three different supply-and-demand graphs.Which graph best represents the market for the air we are currently breathing?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
Find equilibrium price by setting supply...
View Answer

Correct Answer
verified

Correct Answer
verified
The restriction on imports wil...
View Answer

Correct Answer
verified
Without a quota,the supply cur...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
For constant elasticity demand...
View Answer

Correct Answer
verified
We maximize w(1000 - .5w),whic...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The elasticity of supply is ve...
View Answer

Correct Answer
verified

Correct Answer
verified