ECON Quiz 2

If a product has a great many identical substitutes, demand for the product is most likely to be:

Very elastic

A tax on a good will primarily be paid by consumers

if the supply elasticity is much larger than the demand elasticity.

The market demand curve for a product will shift to the right when the price of a substitute good______, the price of a complementary good _______, consumer income ______, and the population ______,

Increases; decreases; increases; increases

For a market and a given price, assume quantity demanded exceeds quantity supplied. This implies for the market a

shortage, and price will rise.

If the government imposes a maximum price on rental apartments that is below the equilibrium price, we can expect to see all of the following except:

new apartment units being build.

If a demand curve is strictly horizontal, then demand is ______; if a demand curve is stickily vertical, then demand is ________.

perfectly elastic; perfectly inelastic.

Supposes that in a month the price of roses increases from $1 to $1.50. At the same time, the quantity demanded decreases from 200 to 190. Elasticity of demand for roses (calculated using the initial value formula) is

0.1

If the equilibrium price of a good decreases and the equilibrium quantity of the good increases, we can conclude that:

Supply increases, i.e., the supply curve shifted to the right.

Suppose that the supply of gasoline increases. Price will _______ and consumer surplus will ______

decrease; increase

Figure 4.1 illustrates the supply and demand for blue jeans. If the actual price of blue jeans is $50, we would expect the price of blue jeans to _____, the quantity demanded of blue jeans to _____, and the quantity supplied to blue jeans to_____, (Question 2 Quiz 2)

decrease; increase; decrease

Suppose we observe that, as a firm increases its price, its total revenue decreases. What do we know?

demand price is elastic.

Peaches and cream are complements. When the price of peaches rises, the equilibrium quantity of cream will________ and the equilibrium price of area will _____.

fall; fall