5.2-5.4

Refer to Figure 5-14. Over which range is the supply curve in this figure the most elastic? $16 to $40 $40 to $100 $100 to $220 $220 to $430

$16 to $40

Refer to Figure 5-15. Using the midpoint method, what is the price elasticity of supply between points C and D? 0.21 0.29 0.73 1.36

0.73

Suppose that an increase in the price of melons from $1.30 to $1.80 per pound increases the quantity of melons that melon farmers produce from 1.2 million pounds to 1.6 million pounds. Using the midpoint method, what is the approximate value of the price elasticity of supply? 0.67 0.89 1.00 1.13

0.89

Refer to Figure 5-15. Using the midpoint method, what is the price elasticity of supply between points B and C? 1.67 1.19 0.84 0.61

1.19

If a 15% change in price results in a 20% change in quantity supplied, then the price elasticity of supply is about 1.33, and supply is elastic. 1.33, and supply is inelastic. 0.75, and supply is elastic. 0.75, and supply is inelastic.

1.33, and supply is elastic

If soybean farmers know that the demand for soybeans is inelastic, in order to increase their total revenues they should use more fertilizers and weed killers to increase their yields. plant additional acres to increase their output. reduce the number of acres they plant to decrease their output. Both a and b are correct.

reduce the number of acres they plant to decrease their output.

Refer to Figure 5-15. Along which of these segments of the supply curve is supply most elastic? AB CD DH GH

AB

Drug-interdiction policies that reduce the supply of illegal drugs may be more effective in the long run than in the short run. be best coupled with drug-education programs designed to reduce demand. increase drug-related crimes. All of the above are correct.

All of the above are correct.

Which of the following statements helps to explain why government drug interdiction increases drug-related crime? The direct impact is on buyers, not sellers. Successful drug interdiction policies reduce the demand for illegal drugs. Drug addicts will have an even greater need for quick cash to support their habits. In the short run, both equilibrium quantities and prices will fall in the markets for illegal drugs.

Drug addicts will have an even greater need for quick cash to support their habits.

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? Both Operation Methbust and Say No would reduce the demand for meth. Both Operation Methbust and Say No would reduce the supply of meth. Operation Methbust would reduce the demand for meth; Operation Say No would reduce the supply of meth. Operation Methbust would reduce the supply of meth; Operation Say No would reduce the demand for meth.

Operation Methbust would reduce the supply of meth; Operation Say No would reduce the demand for meth.

Frequently, in the short run, the quantity supplied of a good is impossible, or nearly impossible, to measure. not very responsive to price changes. determined by the quantity demanded of the good. determined by psychological forces and other non-economic forces.

not very responsive to price changes.

OPEC has coordinated a reduction in supply that was effective in insulating the members from the decrease in demand in the late 2000s. more profitable in the long run than in the short run. profitable in both the short run and the long run. more profitable in the short run than in the long run.

more profitable in the short run than in the long run.

A key determinant of the price elasticity of supply is the ability of sellers to change the price of the good they produce. the ability of sellers to change the amount of the good they produce. how responsive buyers are to changes in sellers' prices. the slope of the demand curve.

the ability of sellers to change the amount of the good they produce.

If the price elasticity of supply is zero, then supply is more elastic than it is in any other case. the supply curve is horizontal. the quantity supplied is the same, regardless of price. a change in demand will cause a relatively small change in the equilibrium price.

the quantity supplied is the same, regardless of price.

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 higher prices and higher total revenue from marijuana sales. higher prices but lower total revenue from marijuana sales. the same price and higher total revenue from marijuana sales. the same price but lower total revenue from marijuana sales.

the same price and higher total revenue from marijuana sales.