ecom exam 2

A price ceiling set at... a. $4 will be binding and will result in a shortage of 8 units. b. $4 will be binding and will result in a shortage of 16 units. c. $7 will be binding and will result in a surplus of 4 units. d. $7 will be binding and will result in a surplus of 8 units.

b. $4 will be binding and will result in a shortage of 16 units.

At which price would a price ceiling be binding? a. $8 b. $5 c. $6 d. $7

b. $5

Using the midpoint method, if the price falls from $100 to $50, the absolute value of the price elasticity of demand is... a. 0.31. b. 0.46. c. 1.25. d. 2.17

b. 0.46.

Using the midpoint method, if the price falls from $200 to $150, the absolute value of the price elasticity of demand is... a. 5.3. b. 2.8. c. 0.8. d. 0.36.

b. 2.8.

At which price would a price floor be binding? a. $7 b. $6 c. $4 d. $5

a. $7

Suppose that when the price of good X falls from $10 to $8, the quantity demanded of good Y rises from 20 units to 25 units. Using the midpoint method, the cross-price elasticity of demand is... a. -1.0, and X and Y are complements. b. -1.0, and X and Y are substitutes. c. 1.0, and X and Y are complements. d. 1.0, and X and Y are substitutes.

a. -1.0, and X and Y are complements

If the price elasticity of demand for apples is 0.8, then a 2.4% increase in the price of apples will decrease the quantity demanded of apples by... a. 1.92%, and apples sellers' total revenue will increase as a result. b. 1.92%, and apples sellers' total revenue will decrease as a result. c. 3%, and apples sellers' total revenue will increase as a result. d. 3%, and apples sellers' total revenue will decrease as a result.

a. 1.92%, and apples sellers' total revenue will increase as a result.

Why was OPEC unable to maintain high oil prices in the long run? a. Demand and supply are both elastic in the long run compared to the short run. b. Demand and supply are both inelastic in the long run compared to the short run. c. Demand is elastic and supply is inelastic in the long run compared to the short run. d. Demand is inelastic and supply is elastic in the long run compared to the short run.

a. Demand and supply are both elastic in the long run compared to the short run.

Which of the following events must result in a higher price in the market for cigars? a. Demand for cigars increases, and supply of cigars decreases. b. Demand for cigars and supply of cigars both decrease. c. Demand for cigars decreases, and supply of cigars increases. d. Demand for cigars and supply of cigars both increase

a. Demand for cigars increases, and supply of cigars decreases.

Suppose the incomes of buyers in a market for a particular normal good decrease and there is also a reduction in input prices. What would we expect to occur in this market? a. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. b. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous. c. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. d. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.

a. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous.

Which of the following statements is valid when the market supply curve is vertical? a. Market quantity supplied does not change when the price changes. b. Supply is perfectly elastic. c. An increase in market demand will increase the equilibrium quantity. d. An increase in market demand will not increase the equilibrium price.

a. Market quantity supplied does not change when the price changes.

What would happen to the equilibrium price and quantity of coffee if the wages of coffee-bean pickers fell and the price of tea fell? a. Price would fall, and the effect on quantity would be ambiguous. b. Price would rise, and the effect on quantity would be ambiguous. c. Quantity would fall, and the effect on price would be ambiguous. d. Quantity would rise, and the effect on price would be ambiguous

a. Price would fall, and the effect on quantity would be ambiguous.

When demand is elastic, a decrease in price will cause... a. an increase in total revenue. b. a decrease in total revenue. c. no change in total revenue but an increase in quantity demanded. d. no change in total revenue but a decrease in quantity demanded.

a. an increase in total revenue

A decrease in supply will cause the largest increase in price when... a. both supply and demand are inelastic. b. both supply and demand are elastic. c. demand is elastic and supply is inelastic. d. demand is inelastic and supply is elastic.

a. both supply and demand are inelastic

In a market economy, supply and demand determine... a. both the quantity of each good produced and the price at which it is sold. b. the quantity of each good produced but not the price at which it is sold. c. the price at which each good is sold but not the quantity of each good produced. d. neither the quantity of each good produced nor the price at which it is sold.

a. both the quantity of each good produced and the price at which it is sold.

If demand is price inelastic, then... a. buyers do not respond much to a change in price. b. buyers respond substantially to a change in price, but the response is very slow. c. buyers do not alter their quantities demanded much in response to advertising, fads, or general changes in tastes. d. the demand curve is very flat.

a. buyers do not respond much to a change in price.

If a tax is imposed on a market with inelastic demand and elastic supply, then... a. buyers will bear most of the burden of the tax. b. sellers will bear most of the burden of the tax. c. the burden of the tax will be shared equally between buyers and sellers. d. it is impossible to determine how the burden of the tax will be shared.

a. buyers will bear most of the burden of the tax.

Demand is said to be unit elastic if quantity demanded... a. changes by the same percent as the price. b. changes by a larger percent than the price. c. changes by a smaller percent than the price. d. does not respond to a change in price.

a. changes by the same percent as the price.

If the government levies a $500 tax per car on sellers of cars, then the price received by sellers of cars would... a. decrease by less than $500. b. decrease by exactly $500. c. decrease by more than $500. d. increase by an indeterminate amount

a. decrease by less than $500.

Two goods are substitutes when a decrease in the price of one good... a. decreases the demand for the other good. b. decreases the quantity demanded of the other good. c. increases the demand for the other good. d. increases the quantity demanded of the other good.

a. decreases the demand for the other good.

Suppose that 50 ice cream cones are demanded at a particular price. If the price of ice cream cones rises from that price by 4 percent, the number of ice cream cones demanded falls to 46. Using the midpoint approach to calculate the price elasticity of demand, it follows that the... a. demand for ice cream cones in this price range is elastic. b. demand for ice cream cones in this price range is inelastic. c. demand for ice cream cones in this price range is unit elastic. d. price elasticity of demand for ice cream cones in this price range is 0.

a. demand for ice cream cones in this price range is elastic.

If the government removes a binding price ceiling from a market, then the price paid by buyers will... a. increase, and the quantity sold in the market will increase. b. increase, and the quantity sold in the market will decrease. c. decrease, and the quantity sold in the market will increase. d. decrease, and the quantity sold in the market will decrease

a. increase, and the quantity sold in the market will increase.

When the price of candy bars is $1.00, the quantity demanded is 500 per day. When the price falls to $0.80, the quantity demanded increases to 600. Given this information and using the midpoint method, we know that the demand for candy bars is a. inelastic. b. elastic. c. unit elastic. d. perfectly inelastic.

a. inelastic.

Which of the following is likely to have the most price elastic demand? a. lattés b. doctor's visits c. eggs d. natural gas

a. lattés

Minimum wage laws... a. may encourage some teenagers to drop out and take jobs. b. create labor shortages. c. have the greatest impact in the market for skilled labor. d. All of the above are correct.

a. may encourage some teenagers to drop out and take jobs

Goods with many close substitutes tend to have... a. more elastic demands. b. less elastic demands. c. price elasticities of demand that are unit elastic. d. income elasticities of demand that are negative

a. more elastic demandd

In a competitive market, each seller has limited control over the price of his product because... a. other sellers are offering similar products. b. buyers exert more control over the price than do sellers. c. these markets are highly regulated by the government. d. sellers usually agree to set a common price that will allow each seller to earn a comfortable profit.

a. other sellers are offering similar products.

For which of the following goods is the price elasticity of demand most inelastic? a. pizza b. large pizza c. large pepperoni pizza d. Domino's large pepperoni pizza

a. pizza

When consumers face rising gasoline prices, they typically a. reduce their quantity demanded more in the long run than in the short run. b. reduce their quantity demanded more in the short run than in the long run. c. do not reduce their quantity demanded in the short run or the long run. d. increase their quantity demanded in the short run but reduce their quantity demanded in the long run.

a. reduce their quantity demanded more in the long run than in the short run.

After a binding price floor becomes effective, a... a. smaller quantity of the good is bought and sold. b. a larger quantity of the good is demanded. c. a smaller quantity of the good is supplied. d. All of the above are correct.

a. smaller quantity of the good is bought and sold.

At a price of $20, there is a... a. surplus of 4 units. b. surplus of 8 units. c. shortage of 4 units. d. shortage of 8 units.

a. surplus of 4 units.

For a good that is a necessity, demand... a. tends to be inelastic. b. tends to be elastic. c. has unit elasticity. d. cannot be represented by a demand curve in the usual way.

a. tends to be inelastic.

In markets, prices move toward equilibrium because of... a. the actions of buyers and sellers b. government regulations placed on market participants c. increased competition among sellers d. buyers' ability to affect market outcomes

a. the actions of buyers and sellers

If the price of walnuts rises, many people would switch from consuming walnuts to consuming pecans. But if the price of salt rises, people would have difficulty purchasing something to use in its place. These examples illustrate the importance of... a. the availability of close substitutes in determining the price elasticity of demand. b. a necessity versus a luxury in determining the price elasticity of demand. c. the definition of a market in determining the price elasticity of demand. d. the time horizon in determining the price elasticity of demand.

a. the availability of close substitutes in determining the price elasticity of demand.

Suppose demand is perfectly elastic, and the supply of the good in question decreases. As a result... a. the equilibrium quantity decreases, and the equilibrium price is unchanged. b. the equilibrium price increases, and the equilibrium quantity is unchanged. c. the equilibrium quantity and the equilibrium price both are unchanged. d. buyers' total expenditure on the good is unchanged.

a. the equilibrium quantity decreases, and the equilibrium price is unchanged.

Income elasticity of demand measures how... a. the quantity demanded changes as consumer income changes. b. consumer purchasing power is affected by a change in the price of a good. c. the price of a good is affected when there is a change in consumer income. d. many units of a good a consumer can buy given a certain income level

a. the quantity demanded changes as consumer income changes.

The demand for a good or service is determined by... a. those who buy the good or service. b. the government. c. those who sell the good or service. d. both those who buy and those who sell the good or service.

a. those who buy the good or service

A key determinant of the price elasticity of supply is the... a. time horizon b. income of consumers c. price elasticity of demand d. importance of the good in a consumers budget

a. time horizon

As the price elasticity of supply approaches infinity, very small changes in price lead to... a. very large changes in quantity supplied. b. very small changes in quantity supplied. c. no change in quantity supplied. d. None of the above is correct.

a. very large changes in quantity supplied.

Between point A and point B, the slope is equal to... a. -1/4, and the price elasticity of demand is equal to 2/3. b. -1/4, and the price elasticity of demand is equal to 3/2. c. -3/2, and the price elasticity of demand is equal to 1/4. d. -2/3, and the price elasticity of demand is equal to 3/2

b. -1/4, and the price elasticity of demand is equal to 3/2.

Studies indicate that the price elasticity of demand for cigarettes is about 0.4. A government policy aimed at reducing smoking changed the price of a pack of cigarettes from $2 to $6. According to the midpoint method, the government policy should have reduced smoking by... a. 30%. b. 40%. c. 80%. d. 250%.

b. 40%.

What is the equilibrium quantity in this market? a. 4 units b. 8 units c. 12 units d. 16 units

b. 8 units

Suppose that demand for a good increases and, at the same time, supply of the good decreases. What would happen in the market for the good? a. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. b. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous. c. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. d. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous

b. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous

Which of the following changes would not shift the demand curve for a good or service? a. a change in income b. a change in the price of the good or service c. a change in expectations about the future price of the good or service d. a change in the price of a related good or service

b. a change in the price of the good or service

Which of the following changes would not shift the supply curve for a good or service? a. a change in production technology b. a change in the price of the good or service c. a change in expectations about the future price of the good or service d. a change in input prices

b. a change in the price of the good or service

Suppose scientists provide evidence that people who drink energy drinks are more likely to have a heart attack than people who do not drink energy drinks. We would expect to see... a. no change in the demand for energy drinks. b. a decrease in the demand for energy drinks. c. an increase in the demand for energy drinks. d. a decrease in the supply of energy drinks.

b. a decrease in the demand for energy drinks.

Rent-control laws dictate... a. the exact rent that landlords must charge tenants. b. a maximum rent that landlords may charge tenants. c. a minimum rent that landlords may charge tenants. d. both a minimum rent and a maximum rent that landlords may charge tenants.

b. a maximum rent that landlords may charge tenants.

In the U.S., before OPEC increase the price of crude oil in 1973, there was.. a. no price ceiling on gasoline. b. a nonbinding price ceiling on gasoline. c. a binding price ceiling on gasoline. d. a nonbinding price floor on gasoline.

b. a nonbinding price ceiling on gasoline.

Which of the following would shift the demand curve for gasoline to the right? a. a decrease in the price of gasoline b. an increase in consumer income, assuming gasoline is a normal good c. an increase in the price of cars, a complement for gasoline d. a decrease in the expected future price of gasoline

b. an increase in consumer income, assuming gasoline is a normal good

If mayonnaise and Miracle Whip are substitutes, then which of the following would increase the demand for Miracle Whip? a. a decrease in the price of Miracle Whip b. an increase in the price of mayonnaise c. a decrease in the price of mayonnaise d. Both a and b are correct.

b. an increase in the price of mayonnaise

In the market for oil in the short run, demand... a, and supply are both elastic b. and supply are both inelastic c. is elastic and supply is inelastic d. is inelastic and supply is elastic

b. and supply are both inelastic

Policymakers use taxes... a. to raise revenue for public purposes but not to influence market outcomes. b. both to raise revenue for public purposes and to influence market outcomes. c. when they realize that price controls alone are insufficient to correct market inequities. d. only in those markets in which the burden of the tax falls clearly on the sellers.

b. both to raise revenue for public purposes and to influence market outcomes.

A good will have a more inelastic demand, the... a. greater the availability of close substitutes. b. broader the definition of the market. c. longer the period of time. d. more it is regarded as a luxury.

b. broader the definition of the market.

If the cross-price elasticity of two goods is negative, then the two goods are... a. necessities. b. complements. c. normal goods. d. inferior goods.

b. complements.

Suppose an airline determines that its customers traveling for business have inelastic demand and its customers traveling for vacations have an elastic demand. If the airline's objective is to increase total revenue, it should... a. increase the price charged to vacationers and decrease the price charged to business travelers. b. decrease the price changed to vacationers and increase the price changed to business travelers c. decrease the price to both groups of customers. d. increase the price for both groups of customers.

b. decrease the price changed to vacationers and increase the price changed to business travelers

Because the demand for wheat tends to be inelastic, the development of a new, more productive hybrid wheat would tend to... a. increase the total revenue of wheat farmers. b. decrease the total revenue of wheat farmers. c. decrease the demand for wheat. d. decrease the supply of wheat.

b. decrease the total revenue of wheat farmers.

An increase in price from $15 to $20 would... a. increase total revenue by $500 b. decrease total revenue by $500. c. increase total revenue by $1,000. d. decrease total revenue by $1,000.

b. decrease total revenue by $500.

If the demand for textbooks is inelastic, then a decrease in the price of textbooks will... a. increase total revenue of textbook sellers. b. decrease total revenue of textbook sellers. c. not change total revenue of textbook sellers. d. There is not enough information to answer this question.

b. decrease total revenue of textbook sellers.

A tax on the sellers of coffee mugs... a. increases the size of the coffee mug market. b. decreases the size of the coffee mug market. c. has no effect on the size of the coffee mug market. d. may increase, decrease, or have no effect on the size of the coffee mug market.

b. decreases the size of the coffee mug market.

Which of the following events must cause equilibrium quantity to fall? a demand increased and supply decreases b. demand and supply both decrease c. demande decreases and supply increases d. demand and supply both increase

b. demand and supply both decrease

Opponents of cigarette taxes often argue that tobacco and marijuana are substitutes so that high cigarette prices... a. encourage marijuana use, and the evidence supports this argument. b. encourage marijuana use, but the evidence does not support this argument. c. discourage marijuana use, and the evidence supports this argument. d. discourage marijuana use, but the evidence does not support this argument

b. encourage marijuana use, but the evidence does not support this argument

At the equilibrium price, the quantity of the good that buyers are willing and able to buy... a. is greater than the quantity that sellers are willing and able to sell. b. exactly equals the quantity that sellers are willing and able to sell. c. is less than the quantity that sellers are willing and able to sell. d. either a) or c) could be correct

b. exactly equals the quantity that sellers are willing and able to sell.

Elasticity of demand is closely related to the slope of the demand curve. The more responsive buyers are to a change in price, the... a. steeper the demand curve will be. b. flatter the demand curve will be. c. further to the right the demand curve will sit. d. closer to the vertical axis the demand curve will sit.

b. flatter the demand curve will be.

For a competitive market... a. a seller can always increase her profit by raising the price of her product. b. if a seller charges more than the going price, buyers will go elsewhere to make their purchases. c. a seller often charges less than the going price to increase sales and profit. d. a single buyer can influence the price of the product but only when purchasing from several sellers in a short period of time.

b. if a seller charges more than the going price, buyers will go elsewhere to make their purchases.

In the early 1970s, OPEC's goal was to... a. decrease the world-wide price of oil so that the quantity demanded increased, thus raising total revenues for OPEC members. b. increase the world-wide price of oil by reducing the quantity of oil supplied. c. increase the world-wide price of oil by increasing the quantity of oil supplied, thus raising total revenues for OPEC members. d. decrease the world-wide price of oil so that quantity demanded increased.

b. increase the world-wide price of oil by reducing the quantity of oil supplied.

Over time, housing shortages caused by rent control... a. increase, because the demand for and supply of housing are less elastic in the long run. b. increase, because the demand for and supply of housing are more elastic in the long run. c. decrease, because the demand for and supply of housing are less elastic in the long run. d. decrease, because the demand for and supply of housing are more elastic in the long run.

b. increase, because the demand for and supply of housing are more elastic in the long run

An increase in price causes an increase in total revenue when demand is... a. elastic. b. inelastic. c. unit elastic. d. All of the above are possible.

b. inelastic

Using the midpoint method, if the price falls from $100 to $50, the price elasticity of demand is... a. zero. b. inelastic. c. unit elastic. d. elastic.

b. inelastic

For prices below $8, demand is price... a. elastic, and total revenue will rise as price rises. b. inelastic, and total revenue will rise as price rises. c. elastic, and total revenue will fall as price rises. d. inelastic, and total revenue will fall as price rises

b. inelastic, and total revenue will rise as price rises.

The tax burden will fall most heavily on sellers of the good when the demand curve... a. is relatively steep, and the supply curve is relatively flat. b. is relatively flat, and the supply curve is relatively steep. c. and the supply curve are both relatively flat. d. and the supply curve are both relatively steep.

b. is relatively flat, and the supply curve is relatively steep.

Most labor economists believe that the supply of labor is.. a. less elastic than the demand, and, therefore, firms bear most of the burden of the payroll tax. b. less elastic than the demand, and therefore, workers bear most of the burden of the payroll tax c. more elastic than the demand, and, therefore, workers bear most of the burden of the payroll tax. d. more elastic than the demand, and, therefore, firms bear most of the burden of the payroll tax.

b. less elastic than the demand, and therefore, workers bear most of the burden of the payroll tax

Another term for equilibrium price is... a. dynamic price b. market- clearing price c. quantity-defining price. d. balance price

b. market- clearing price

When a tax is placed on the sellers of a product, buyers pay... a. more, and sellers receive more than they did before the tax. b. more, and sellers receive less than they did before the tax. c. less, and sellers receive more than they did before the tax. d. less, and sellers receive less than they did before the tax.

b. more, and sellers receive less than they did before the tax.

Assume the demand for cigarettes is relatively inelastic, and the supply of cigarettes is relatively elastic. When cigarettes are taxed, we would expect... a. most of the burden of the tax to fall on sellers of cigarettes, regardless of whether buyers or sellers of cigarettes are required to pay the tax to the government. b. most of the burden of the tax to fall on buyers of cigarettes, regardless of whether buyers or sellers of cigarettes are required to pay the tax to the government c. the distribution of the tax burden between buyers and sellers of cigarettes to depend on whether buyers or sellers of cigarettes are required to pay the tax to the government. d. a large percentage of smokers to quit smoking in response to the tax.

b. most of the burden of the tax to fall on buyers of cigarettes, regardless of whether buyers or sellers of cigarettes are required to pay the tax to the government

A legal minimum on the price at which a good can be sold is called a... a. price subsidy. b. price floor. c. tax. d. price ceiling.

b. price floor

Adam Smith suggested that an invisible had guides market economies. In this analogy, what is the baton that the invisible hand uses to conduct the economic orchestra? a. the government b. prices c. subsidies d. the Federal Reserve

b. prices

A perfectly inelastic demand implies that buyers... a. decrease their purchases when the price rises. b. purchase the same amount as before when the price rises or falls. c. increase their purchases only slightly when the price falls. d. respond substantially to an increase in price.

b. purchase the same amount as before when the price rises or falls.

When a shortage exists in a market, sellers... a. raise price, which increases quantity demanded and decreases quantity supplied until the a shortage exists in a market, sellers shortage is eliminated. b. raise price, which decreases quantity demanded and increases quantity supplied until the shortage is eliminated. c. lower price, which increases quantity demanded and decreases quantity supplied until the shortage is eliminated. d. lower price, which decreases quantity demanded and increases quantity supplied until the shortage is eliminated.

b. raise price, which decreases quantity demanded and increases quantity supplied until the shortage is eliminated.

The law of supply states that, other things equal, when the price of a good... a. falls, the supply of the good rises. b. rises, the quantity supplied of the good rises. c. rises, the supply of the good falls. d. falls, the quantity supplied of the good rises.

b. rises, the quantity supplied of the good rises

A monopoly is a market with one... a. seller, and that seller is a price taker. b. seller, and that seller sets the price. c. buyer, and that buyer is a price taker. d. buyer, and that buyer sets the price.

b. seller, and that seller sets the price.

Rent control... a. serves as an example of how a social problem can be alleviated or even solved by government policies. b. serves as an example of a price ceiling. c. is regarded by most economists as an efficient way of helping the poor. d. is the most efficient way to allocate scarce housing resources.

b. serves as an example of a price ceiling.

if the price elasticity of supply for a good is equal to infinity, then the... a. supply curve is vertical. b. supply curve is horizontal. c. supply curve also has a slope equal to infinity. d. quantity supplied is constant regardless of the price.

b. supply curve is horizontal.

If the number of sellers in a market increases, then the.. a. demand in that market will increase. b. supply in that market will increase. c. supply in that market will decrease. d. demand in that market will decrease.

b. supply in that market will increase.

If the quantity supplied responds only slightly to changes in price, then... a. supply is said to be elastic. b. supply is said to be inelastic. c. an increase in price will not shift the supply curve very much. d. even a large decrease in demand will change the equilibrium price only slightly.

b. supply is said to be inelastic

At a price of $24, there is a... a. surplus of 4 units. b. surplus of 8 units. c. shortage of 4 units d. shortage of 8 units

b. surplus of 8 units.

Suppose demand is perfectly inelastic, and the supply of the good in question decreases. As a result... a. the equilibrium quantity decreases, and the equilibrium price is unchanged. b. the equilibrium price increases, and the equilibrium quantity is unchanged. c. the equilibrium quantity and the equilibrium price both are unchanged. d. buyers' total expenditure on the good is unchanged.

b. the equilibrium price increases, and the equilibrium quantity is unchanged

Today's demand curve for gasoline could shift in response to a change in... a. today's price of gasoline. b. the expected future price of gasoline. c. the number of sellers of gasoline. d. All of the above are correct.

b. the expected future price of gasoline

Today's supply curve for gasoline could shift in response to a change in... a. today's price of gasoline. b. the expected future price of gasoline. c. the number of buyers of gasoline. d. All of the above are correct.

b. the expected future price of gasoline

The law of supply and demand asserts that... a. demand curves and supply curves tend to shift to the right as time goes by. b. the price of a good will eventually rise in response to an excess demand for that good. c. when the supply curve for a good shifts, the demand curve for that good shifts in response. d. the equilibrium price of a good will be rising more often than it will be falling.

b. the price of a good will eventually rise in response to an excess demand for that good.

Which of the following is not held constant in a supply schedule? a. production technology b. the price of the good c. the prices of inputs d. expectations

b. the price of the good

The price elasticity of supply measures how much... a. the quantity supplied responds to changes in input prices. b. the quantity supplied responds to changes in the price of the good. c. the price of the good responds to changes in supply. d. sellers respond to changes in technology

b. the quantity supplied responds to changes in the price of the good.

The supply curve for portable charcoal grills shifts... a. only when production technology changes. b. when a determinant of the supply of portable charcoal grills other than the price of portable charcoal grills change c. when any determinant of the supply of portable charcoal grills changes. d. only when the number of sellers of portable charcoal grills changes.

b. when a determinant of the supply of portable charcoal grills other than the price of portable charcoal grills change

Price controls are usually enacted... a. as a means of raising revenue for public purposes. b. when policymakers believe that the market price of a good or service is unfair to buyers or sellers c. when policymakers tax a good. d. All of the above are correct

b. when policymakers believe that the market price of a good or service is unfair to buyers or sellers

A manufacturer produces 1,000 units, regardless of the market price. For this firm, the price elasticity of supply is... a. infinity. b. zero. c. one d. negative one

b. zero.

What is the equilibrium price in this market? a. $8 b. $12 c. $16 d. $20

c. $16

When the price of good A is $50, the quantity demanded of good A is 500 units. When the price of good A rises to $70, the quantity demanded of good A falls to 400 units. Using the midpoint method, the price elasticity of demand for good A is.. a. 1.50, and an increase in price will result in an increase in total revenue for good A. b. 1.50, and an increase in price will result in a decrease in total revenue for good A. c. 0.67, and an increase in price will result in an increase in total revenue for good A. d. 0.67, and an increase in price will result in a decrease in total revenue for good A.

c. 0.67, and an increase in price will result in an increase in total revenue for good A.

When demand is unit elastic, price elasticity of demand equals... a. 1, and total revenue and price move in the same direction. b. 1, and total revenue and price move in opposite directions. c. 1, and total revenue does not change when price changes. d. 0, and total revenue does not change when price changes

c. 1, and total revenue does not change when price changes.

Using the midpoint method, if the price falls from $150 to $100, the absolute value of the price elasticity of demand is... a. 0.4. b. 0.9. c. 1.1. d. 2.

c. 1.1

If the price elasticity of supply is 1.5, and a price increase led to a 1.8% increase in quantity supplied, then the price increase is about a. 0.67%. b. 0.83%. c. 1.20%. d. 2.70%.

c. 1.20%.

Between point A and point B, price elasticity of demand is equal to... a. 0.33. b. 0.67. c. 1.5 d. 2.67.

c. 1.5

A manufacturer produces 400 units when the market price is $10 per unit and produces 600 units when the market price is $12 per unit. Using the midpoint method, for this range of prices, the price elasticity of supply is about... a. 0.45. b. 2.0. c. 2.2. d. 200

c. 2.2

Suppose the price of a bag of frozen chicken nuggets decreases from $6.50 to $5.75 and, as a result, the quantity of bags demanded increases from 600 to 800. Using the midpoint method, the price elasticity of demand for frozen chicken nuggets in the given price range is... a. 0.35. b. 0.43. c. 2.33. d. 2.89.

c. 2.33

If the price elasticity of demand for a good is 0.5, then a 5 percent increase in price results in a... a. 0.1 percent decrease in the quantity demanded. b. 1 percent decrease in the quantity demanded. c. 2.5 percent decrease in the quantity demanded. d. 10 percent decrease in the quantity demanded.

c. 2.5 percent decrease in the quantity demanded.

If the price elasticity of demand for a good is 2.0, then a 10 percent increase in price results in a... a. 0.2 percent decrease in the quantity demanded. b. 5 percent decrease in the quantity demanded. c. 20 percent decrease in the quantity demanded. d. 40 percent decrease in the quantity demanded.

c. 20 percent decrease in the quantity demanded.

Suppose the price elasticity of supply for cheese is 0.6 in the short run and 1.4 in the long run. If an increase in the demand for cheese causes the price of cheese to increase by 15%, then the quantity supplied of cheese will increase by... a. 0.4% in the short run and 4.6% in the long run. b. 1.7% in the short run and 0.7% in the long run. c. 9% in the short run and 21% in the long run. d. 25% in the short run and 10.7% in the long run.

c. 9% in the short run and 21% in the long run.

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

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

When price falls from $25 to $20, demand is... a. inelastic, since total revenue decreases from $4,000 to $2,500. b. inelastic, since total revenue increases from $2,500 to $4,000. c. elastic, since total revenue increases from $2,500 to $4,000. d. unit elastic, since total revenue does not change.

c. elastic, since total revenue increases from $2,500 to $4,000.

During the last few decades in the United States, health officials have argued that eating too much beef might be harmful to human health. As a result, there has been a significant decrease in the amount of beef produced. Which of the following best explains the decrease in production? a. Beef producers, concerned about the health of their customers, decided to produce relatively less beef. b. Government officials, concerned about consumer health, ordered beef producers to produce relatively less beef. c. Individual consumers, concerned about their own health, decreased their demand for beef, which lowered the equilibrium price of beef, making it less attractive to produce d. Anti-beef protesters have made it difficult for both buyers and sellers of beef to meet in the marketplace.

c. Individual consumers, concerned about their own health, decreased their demand for beef, which lowered the equilibrium price of beef, making it less attractive to produce

How does total revenue change as one moves downward and to the right along a linear demand curve? a. It always increases. b. It always decreases. c. It first increases, then decreases. d. It is unaffected by a movement along the demand curve.

c. It first increases, then decrease

Which of the following is likely to have the most price elastic demand? a. clothing b. blue jeans c. Tommy Hilfiger jeans d. All three would have the same elasticity of demand because they are all related.

c. Tommy Hilfiger jeans

The minimum wage was instituted to ensure workers... a. a middle-class standard of living. b. employment. c. a minimally adequate standard of living. d. unemployment compensation.

c. a minimally adequate standard of living

Minimum-wage laws dictate.. a. the exact wage that firms must pay workers. b. a maximum wage that firms may pay workers. c. a minimum wage that firms may pay workers. d. both a minimum wage and a maximum wage that firms may pay workers.

c. a minimum wage that firms may pay workers.

When we move along a given supply curve... a. only price is held constant b. technology and price are held constant. c. all nonprice determinants of supply are held constant. d. all determinants of quantity supplied are held constant.

c. all nonprice determinants of supply are held constant.

Suppose good X has a negative income elasticity of demand. This implies that good X is... a. a normal good. b. a necessity. c. an inferior good. d. a luxury.

c. an inferior good.

A price ceiling will be binding only if it is set... a. equal to the equilibrium price b. above the equilibrium price c. below the equilibrium price d. either above or below the equilibrium price

c. below the equilibrium price

If a shortage exists in a market, then we know that the actual price is... a. above the equilibrium price, and quantity supplied is greater than quantity demanded. b. above the equilibrium price, and quantity demanded is greater than quantity supplied. c. below the equilibrium price, and quantity demanded is greater than quantity supplied. d. below the equilibrium price, and quantity supplied is greater than quantity demanded.

c. below the equilibrium price, and quantity demanded is greater than quantity supplied

A shortage results when a... a. nonbinding price ceiling is imposed on a market. b. nonbinding price ceiling is removed from a market. c. binding price ceiling is imposed on a market. d. binding price ceiling is removed from a market.

c. binding price ceiling is imposed on a market

A movement downward and to the left along a supply curve is called a(n)... a. increase in supply. b. decrease in supply. c. decrease in quantity supplied. d. increase in quantity supplied.

c. decrease in quantity supplied.

If the government removes a tax on a good, then the price paid by buyers will... a. increase, and the price received by sellers will increase. b. increase, and the price received by sellers will decrease. c. decrease, and the price received by sellers will increase. d. decrease, and the price received by sellers will decrease.

c. decrease, and the price received by sellers will increase.

If the government removes a binding price floor from a market, then the price paid by buyers will... a. increase, and the quantity sold in the market will increase b. increase, and the quantity sold in the market will decrease c. decrease, and the quantity sold in the market will increase d. decrease, and the quantity sold in the market will decrease

c. decrease, and the quantity sold in the market will increase

Which of the following events must cause equilibrium price to fall? a. demand increases and supply decreases b. demand and supply both decrease c. demand decreases and supply increases d. demand and supply both increase

c. demand decreases and supply increases

Good news for farming can be bad news for farmers because the... a. supply curve for an individual farmer is usually perfectly elastic b. supply curve for an individual farmer is usually inelastic c. demand for basic foodstuffs is usually elastic, meaning that factors that shift supply to the right increase total revenues to sellers d. demand for basic foodstuffs is usually elastic, meaning that factors that shift supply to the right increase total revenue to sellers

c. demand for basic foodstuffs is usually elastic, meaning that factors that shift supply to the right increase total revenues to sellers

Tax incidence... a. depends on the legislated burden. b. is entirely random. c. depends on the elasticities of supply and demand. d. falls entirely on buyers or entirely on sellers.

c. depends on the elasticities of supply and demand.

For prices above $8, demand is price... a. elastic, and total revenue will rise as price rises. b. inelastic, and total revenue will rise as price rises. c. elastic, and total revenue will fall as price rises. d. inelastic, and total revenue will fall as price rises.

c. elastic, and total revenue will fall as price rises.

Recent forest fires in the western states are expected to cause the price of lumber to rise in the next six months. As a result, we can expect the supply of lumber to... a. fall in six months but not now. b. increase in six months when the price goes up. c. fall now. d. increase now to meet as much demand as possible.

c. fall now.

If textbooks and study guides are complements, then an increase in the price of textbooks will result in... a. more textbooks being sold. b. more study guides being sold. c. fewer study guides being sold. d. no difference in the quantity sold of either good.

c. fewer study guides being sold.

The price elasticity of supply along a typical supply curve is... a. constant b. equal to zero c. higher at low levels of quantity supplied and lower at high levels of quantity supplied d. lower at low levels of quantity supplied and higher at high levels of quantity supplied

c. higher at low levels of quantity supplied and lower at high levels of quantity supplied

If the government levies a $1,000 tax per boat on sellers of boats, then the price paid by buyers of boats would... a. increase by more than $1,000. b. increase by exactly $1,000. c. increase by less than $1,000. d. decrease by an indeterminate amount.

c. increase by less than $1,000.

An increase in price from $10 to $15 would... a. increase total revenue by $1,000. b. decrease total revenue by $1,000. c. increase total revenue by $500. d. decrease total revenue by $500.

c. increase total revenue by $500.

When a surplus exists in a market, sellers... a. raise price, which increases quantity demanded and decreases quantity supplied, until the surplus is eliminated. b. raise price, which decreases quantity demanded and increases quantity supplied, until the surplus is eliminated. c. lower price, which increases quantity demanded and decreases quantity supplied, until the surplus is eliminated. d. lower price, which decreases quantity demanded and increases quantity supplied, until the surplus is eliminated.

c. lower price, which increases quantity demanded and decreases quantity supplied, until the surplus is eliminated.

When OPEC raised the price of crude oil in the 1970s, it caused the US'... a. nonbinding price floor on gasoline to become binding. b. binding price floor on gasoline to become nonbinding. c. nonbinding price ceiling on gasoline to become binding. d. binding price ceiling on gasoline to become nonbinding.

c. nonbinding price ceiling on gasoline to become binding

Economists compute the price elasticity of demand as the... a. percentage change in price divided by the percentage change in quantity demanded. b. change in quantity demanded divided by the change in the price. c. percentage change in quantity demanded divided by the percentage change in price. d. percentage change in quantity demanded divided by the percentage change in income

c. percentage change in quantity demanded divided by the percentage change in price.

Which of the following is not held constant in a demand schedule? a. income b. tastes c. price d. expectations

c. price

Suppose that when the price of wheat is $2 per bushel, farmers can sell 10 million bushels. When the price of wheat is $3 per bushel, farmers can sell 8 million bushels. Which of the following statements is true? The demand for wheat is a. income inelastic, so an increase in the price of wheat will increase the total revenue of wheat farmers. b. income elastic, so an increase in the price of wheat will increase the total revenue of wheat farmers. c. price inelastic, so an increase in the price of wheat will increase the total revenue of wheat farmers d. price elastic, so an increase in the price of wheat will increase the total revenue of wheat farmers.

c. price inelastic, so an increase in the price of wheat will increase the total revenue of wheat farmers

There is no shortage of scarce resources in a market economy because... a. the government makes shortages illegal b. resources are abundant in market economies c. prices adjust to eliminate shortages d. quantity supplied is always greater than quantity demanded in market economies

c. prices adjust to eliminate shortages

Which of the following events could shift the demand curve for gasoline to the left? a. The income of gasoline buyers rises, and gasoline is a normal good. b. The income of gasoline buyers falls, and gasoline is an inferior good. c. public service announcements run on televisions encourage people to walk or ride bikes instead of driving cars d. The price of gasoline rises.

c. public service announcements run on televisions encourage people to walk or ride bikes instead of driving cars

An increase in demand is represented by a... a. movement downward and to the right along a demand curve. b. movement upward and to the left along a demand curve. c. rightward shift of a demand curve. d. leftward shift of a demand curve.

c. rightward shift of a demand curve.

Which of the following is likely to have the most price inelastic demand? a. white chocolate chip with macadamia nut cookies b. hardback novels c. salt d. box seats at a major league baseball game

c. salt

When a supply curve is relatively flat, the... a. sellers are not at all responsive to a change in price b. equilibrium price changes substantially when the demand for the good changes c. supply is relatively elastic d. supply is relatively inelastic

c. supply is relatively elastic

Workers at a bicycle assembly plant currently earn the mandatory minimum wage. If the federal government increases the minimum wage by $1.00 per hour, then it is likely that the... a. demand for bicycle assembly workers will increase. b. supply of bicycles will shift to the right. c. supply of bicycles will shift to the left. d. firm must increase output to maintain profit levels.

c. supply of bicycles will shift to the left.

A minimum wage that is set above a market's equilibrium wage will result in an excess... a. demand for labor, that is, unemployment. b. demand for labor, that is, a shortage of workers. c. supply of labor, that is, unemployment. d. supply of labor, that is, a shortage of workers.

c. supply of labor, that is, unemployment

A payroll tax is a... a. fixed number of dollars that every firm must pay to the government for each worker that the firm hires. b. tax that each firm must pay to the government before the firm can hire workers and operate its business. c. tax on the wages that firms pay their workers. d. tax on all wages above the minimum wage.

c. tax on the wages that firms pay their workers.

in the 1970s, long lines at gas stations in the US were primarily a result of the fact that... a. OPEC raised the price of crude oil in world markets b. US gas producers raised the price of gas c. the US government maintained a price ceiling on gas d. Americans typically commuted long distances

c. the US government maintained a price ceiling on gas

A surplus exists in a market if... a. there is an excess demand for the good. b. quantity demanded exceeds quantity supplied. c. the current price is above its equilibrium price. d. All of the above are correct.

c. the current price is above its equilibrium price.

A shortage exists in a market if... a. there is an excess supply of the good. b. quantity supplied exceeds quantity demanded. c. the current price is below its equilibrium price. d. All of the above are correct.

c. the current price is below its equilibrium price.

The term tax incidence refers to... a. whether buyers or sellers of a good are required to send tax payments to the government. b. whether the demand curve or the supply curve shifts when the tax is imposed. c. the distribution of the tax burden between buyers and sellers. d. widespread view that taxes (and death) are the only certainties in life.

c. the distribution of the tax burden between buyers and sellers.

Cross-price elasticity of demand measures how... a. the price of one good changes in response to a change in the price of another good. b. the quantity demanded of one good changes in response to a change in the quantity demanded of another good. c. the quantity demanded of one good changes in response to a change in the price of another good d. strongly normal or inferior a good is.

c. the quantity demanded of one good changes in response to a change in the price of another good

The supply of a good or service is determined by... a. those who buy the good or service. b. the government. c. those who sell the good or service. d. both those who buy and those who sell the good or service.

c. those who sell the good or service.

The federal government is concerned about obesity in the United States. Congress is considering two plans. One will ban the production and sale of "junk food." The other will increase nutrition-education programs and include substantial advertising campaigns to encourage healthy eating habits. The junk- food ban program... a. and the education program will reduce the quantity of junk food sold and raise the price. b. and the education program will reduce the quantity of junk food sold and lower the price. c. will reduce the quantity of junk food sold and raise the price. The education program will reduce the quantity of junk food sold and lower the price. d. will reduce the quantity of junk food sold and lower the price. The education program will reduce the quantity of junk food sold and raise the price.

c. will reduce the quantity of junk food sold and raise the rice. The education program will reduce the quantity of junk food sold and lower the price.

When the price is $15, total revenue is... a. $1,500. b. $2,500. c. $3,500. d. $4,500.

d. $4,500

At which price would a price ceiling be nonbinding? a. $4 b. $5 c. $3 d. $7

d. $7

A price floor set at... a. $4 will be binding and will result in a shortage of 8 units. b. $4 will be binding and will result in a shortage of 16 units. c. $7 will be binding and will result in a surplus of 4 units. d. $7 will be binding and will result in a surplus of 8 units.

d. $7 will be binding and will result in a surplus of 8 units.

Suppose that when the price of good X increases from $800 to $850, the quantity demanded of good Y increases from 65 to 70. Using the midpoint method, the cross price elasticity of demand is about... a. -1.2, and X and Y are complements. b. -0.1, and X and Y are complements. c. 0.1, and X and Y are substitutes. d. 1.2, and X and Y are substitutes.

d. 1.2, and X and Y are substitutes.

A bakery would be willing to supply 500 bagels per day at a price of $0.50 each. At a price of $0.80, the bakery would be willing to supply 1,100 bagels. Using the midpoint method, the price elasticity of supply for bagels is about... a. 0.62. b. 0.77. c. 1.24. d. 1.63.

d. 1.63

On a certain supply curve, one point is (quantity supplied = 200, price = $4.00) and another point is (quantity supplied = 250, price = $4.50). Using the midpoint method, the price elasticity of supply is about a. 0.22. b. 0.53. c. 1.00. d. 1.89.

d. 1.89

Heath's income elasticity of demand for concerts is 2. All else equal, this means that if his income increases by 10 percent, he will purchase tickets for... a. 2 percent more concerts. b. 5 percent more concerts. c. 10 percent more concerts. d. 20 percent more concerts.

d. 20 percent more concerts.

Last year, Tess bought 5 handbags when her income was $54,000. This year, her income is $60,000, and she purchased 7 handbags. Holding other factors constant, it follows that Tess's income elasticity of demand is about... a. 0.32, and Tess regards handbags as inferior goods. b. 0.32, and Tess regards handbags as normal goods. c. 3.17, and Tess regards handbags as inferior goods. d. 3.17, and Tess regards handbags as normal goods.

d. 3.17, and Tess regards handbags as normal goods.

The demand for Godiva mint chocolates is likely quite elastic because... a. there are many close substitutes. b. this particular type of chocolate is viewed as a luxury by many chocolate lovers. c. the market is narrowly defined. d. All of the above are correct.

d. All of the above are correct.

Suppose the number of buyers in a market increases and a technological advancement occurs also. What would we expect to happen in the market? a. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. b. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous. c. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. d. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.

d. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.

Which of the following events would cause a movement upward and to the right along the supply curve for mangos? a. The number of sellers of mangos increases. b. There is an advance in technology that reduces the cost of producing mangos. c. The price of fertilizer decreases, and fertilizer is an input in the production of mangos. d. The price of mangos rises.

d. The price of mangos rises.

Which of the following would most likely serve as an example of a monopoly? a. a restaurant in a large city b. a dry cleaners in a large city c. a local gas station d. a local electrical company

d. a local electrical company

In a competitive market, the quantity of a product produced and the price of the product are determined by... a. a single buyer. b. a single seller. c. one buyer and one seller working together. d. all buyers and all sellers.

d. all buyers and all sellers.

Demand is said to be price elastic if.. a. the price of the good responds substantially to changes in demand. b. demand shifts substantially when income or the expected future price of the good changes. c. buyers do not respond much to changes in the price of the good. d. buyers respond substantially to changes in the price of the good.

d. buyers respond substantially to changes in the price of the good.

The cross-price elasticity of demand can tell us whether goods are... a. normal or inferior. b. elastic or inelastic. c. luxuries or necessities. d. complements or substitutes.

d. complements or substitutes.

An early frost in the vineyards of Napa Valley would cause a(n) a. increase in the demand for wine, increasing price. b. increase in the supply of wine, decreasing price. c. decrease in the demand for wine, decreasing price. d. decrease in the supply of wine, increasing price.

d. decrease in the supply of wine, increasing price.

A decrease in the price of a good will... a. increase supply. b. decrease supply. c. increase quantity supplied. d. decrease quantity supplied.

d. decrease quantity supplied.

Between point A and point B on the graph, demand is... a. perfectly elastic. b. inelastic. c. unit elastic. d. elastic, but not perfectly elastic

d. elastic, but not perfectly elastic

Holding all other factors constant and using the midpoint method, if a candy manufacturer increases production by 20 percent when the market price of candy increases from $0.50 to $0.60, then supply is.. a. inelastic, since the price elasticity of supply is equal to .91. b. inelastic, since the price elasticity of supply is equal to 1.1. c. elastic, since the price elasticity of supply is equal to 0.91. d. elastic, since the price elasticity of supply is equal to 1.1.

d. elastic, since the price elasticity of supply is equal to 1.1.

Using the midpoint method, if the price falls from $200 to $150, the price elasticity of demand is... a. zero. b. unit elastic. c. inelastic. d. elastic.

d. elastic.

The unique point at which the supply and demand curves intersect is called... a. market harmony. b. coincidence. c. equivalence. d. equilibrium.

d. equilibrium.

The law of demand states that, other things equal, when the price of a good... a. falls, the demand for the good rises. b. rises, the quantity demanded of the good rises. c. rises, the demand for the good falls. d. falls, the quantity demanded of the good rises.

d. falls, the quantity demanded of the good rises.

The goal of rent control is to... a. facilitate controlled economic experiments in urban areas. b. help landlords by assuring them a low vacancy rate for their apartments. c. help the poor by assuring them an adequate supply of apartments. d. help the poor by making housing more affordable.

d. help the poor by making housing more affordable.

Most markets in the economy are... a. markets in which sellers, rather than buyers, control the price of the product. b. markets in which buyers, rather than sellers, control the price of the product. c. perfectly competitive. d. highly competitive.

d. highly competitive.

Two goods are complements when a decrease in the price of one good... a. decreases the quantity demanded of the other good. b. decreases the demand for the other good. c. increases the quantity demanded of the other good. d. increases the demand for the other good.

d. increases the demand for the other good.

A decrease in supply is represented by a... a. movement downward and to the left along a supply curve. b. movement upward and to the right along a supply curve. c. rightward shift of a supply curve. d. leftward shift of a supply curve.

d. leftward shift of a supply curve.

When the price of a good or service changes... a. the supply curve shifts in the opposite direction. b. the demand curve shifts in the opposite direction. c. the demand curve shifts in the same direction. d. there is a movement along a given demand curve.

d. there is a movement along a given demand curve.

Necessities such as food and clothing tend to have... a. high price elasticities of demand and high income elasticities of demand. b. high price elasticities of demand and low income elasticities of demand. c. low price elasticities of demand and high income elasticities of demand. d. low price elasticities of demand and low income elasticities of demand.

d. low price elasticities of demand and low income elasticities of demand.

In the housing market, supply and demand are... a. more elastic in the short run than in the long run, and so rent control leads to a larger shortage of apartments in the short run than in the long run. b. more elastic in the short run than in the long run, and so rent control leads to a larger shortage of apartments in the long run than in the short run. c. more elastic in the long run than in the short run, and so rent control leads to a larger shortage of apartments in the short run than in the long run. d. more elastic in the long run than in the short run, and so rent control leads to a larger shortage of apartments in the long run than in the short run.

d. more elastic in the long run than in the short run, and so rent control leads to a larger shortage of apartments in the long run than in the short run.

A competitive market is a market in which... a. an auctioneer helps set prices and arrange sales. b. there are only a few sellers. c. the forces of supply and demand do not apply. d. no individual buyer or seller has any significant impact on the market price.

d. no individual buyer or seller has any significant impact on the market price.

If the price of natural gas rises, when is the price elasticity of demand likely to be the highest? a. immediately after the price increase b. one month after the price increase c. three months after the price increase d. one year after the price increase

d. one year after the price increase

The signals that guide the allocation of resources in a market economy are... a. surpluses and shortages b. quantities c. government policies d. prices

d. prices

A drug interdiction program that successfully reduces the supply of illegal drugs in the United States likely will... a. raise the price, reduce the quantity, decrease total revenues, and decrease crime. b. lower the price, increase the quantity, increase total revenues, and increase crime. c. raise the price, increase the quantity, decrease total revenues, and increase crime. d. raise the price, reduce the quantity, increase total revenues, and increase crime.

d. raise the price, reduce the quantity, increase total revenues, and increase crime.

At a price of $12, there is a... a. surplus of 2 units b. surplus of 4 units c. shortage of 2 units d. shortage of 4 units

d. shortage of 4 units

At a price of $8, there is a... a. surplus of 4 units. b. surplus of 8 units. c. shortage of 4 units. d. shortage of 8 units.

d. shortage of 8 units.

As we move downward and to the right along a linear, downward-sloping demand curve... a. both slope and elasticity remain constant. b. slope changes but elasticity remains constant. c. both slope and elasticity change. d. slope remains constant but elasticity changes.

d. slope remains constant but elasticity changes.

When a binding price floor is imposed on a market to benefit sellers, a. every seller in the market benefits b. all buyers and sellers benefit c. every seller who wants to sell the good will be able to do so, but only id he appeals to the personal biases of the buyers d. some sellers will not be able to sell any amount of the good

d. some sellers will not be able to sell any amount of the good

In a market economy... a. supply determines demand and demand, in turn, determines prices. b. demand determines supply and supply, in turn, determines prices. c. the allocation of scarce resources determines prices and prices, in turn, determine supply and demand. d. supply and demand determine prices and prices, in turn, allocate the economies scarce resources

d. supply and demand determine prices and prices, in turn, allocate the economies scarce resources

The minimum wage has its greatest impact on the market for... a. female labor. b. older labor. c. black labor. d. teenage labor.

d. teenage labor

A city wants to raise revenues to build a new municipal swimming pool next year. The mayor suggests that the city raise the price of admission to the current municipal pools this year to raise revenues. The city manager suggests that the city lower the price of admission to raise revenues. Who is correct? a. Both the mayor and city manager would be correct if demand were price elastic. b. Both the mayor and city manager would be correct if demand were price inelastic. c. The mayor would be correct if demand were price elastic; the city manager would be correct if demand were price inelastic. d. the mayor would be correct if demand are price inelastic; the city manager would be correct if demand were very elastic

d. the mayor would be correct if demand are price inelastic; the city manager would be correct if demand were very elastic

A movement along the supply curve might be caused by a change in... a. production technology. b. input prices. c. expectations about future prices. d. the price of the good or service that is being supplied.

d. the price of the good or service that is being supplied.

Lawmakers designed the burden of the FICA payroll tax to be split evenly between workers and firms. Labor economists believe that... a. lawmakers may have actually achieved their goal because statistics show that the tax burden is currently equally divided. b. the tax raises too little revenue for the government, so it should be eliminated. c. firms bear most of the burden of the tax. d. workers bear most of the burden of the tax.

d. workers bear most of the burden of the tax.