Micro econ test 2
zero
A manufacturer produces 1,000 units, regardless of the market price. For this firm, the price elasticity of supply is
any rise in price above that represented by the demand curve will result in a quantity demanded of zero
A perfectly elastic demand implies that
purchase the same amount as before when the price rises or falls.
A perfectly inelastic demand implies that buyers
falls more heavily on the side of the market that is less elastic
A tax burden
raise the price buyers pay and lower the effective price sellers receive
A tax imposed on the buyers of a good will
increases sellers' costs, reduces profits, and shifts the supply curve up
A tax levied on the sellers of blueberries
bad for farmers because total revenue will fall but good for consumers because prices for food will fall
An advance in farm technology that results in an increased market supply is
undesirable rationing mechanisms
An outcome that can result from either a price ceiling or a price floor is
decrease the total revenue of wheat farmers
Because the demand for wheat tends to be inelastic, the development of a new, more productive hybrid wheat would tend to
South American cocoa bean producers refuse to ship to chocolate producers in the US
Consider the US market for chocolate, a market in which the government has imposed a price ceiling. Which of the following events could convert the price ceiling from a nonbinding to a binding price ceiling?
quantity demanded changes proportionately less than price
Demand is said to be inelastic if the
may increase drug-related crimes
Drug-interdiction policies that reduce the supply of illegal drugs
steeper the demand curve will be
Elasticity of demand is closely related to the slope of the demand curve. The less responsive buyers are to a change in price, the
small income elasticities because consumers, regardless of their incomes, choose to buy relatively constant quantities of these goods
Food and clothing tend to have
The relevant time horizon is short
For a particular good, a 10 percent increase in price causes a 3 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?
The good is a necessity
For a particular good, a 12 percent increase in price causes a 3 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?
The good is a luxury
For a particular good, a 2 percent increase in price causes a 12 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?
There are many close substitutes for this good
For a particular good, a 3 percent increase in price causes a 10 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?
There are many substitutes for this good
For a particular good, a 5 percent increase in price causes a 15 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?
The market for the good is broadly defined.
For a particular good, a 5 percent increase in price causes a 2 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?
The relevant time horizon is long
For a particular good, an 8 percent increase in price causes a 12 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?
diamonds
For which of the following goods is the income elasticity of demand likely highest?
water
For which of the following goods is the income elasticity of demand likely lowest?
peanut butter and jelly
For which pairs of goods is the cross-price elasticity most likely to be negative?
assuming that the demand for university education is inelastic
Get Smart University is contemplating an increase in tuition to enhance revenue. If GSU feels that raising tuition would enhance revenue, it is
the demand for the good must be unit elastic
If a change in the price of a good results in no change in total revenue, then
reduce the number of acres they plant to decrease their output
If soybean farmers know that the demand for soybeans is inelastic, in order to increase their total revenues they should
the two goods are complements
If the cross-price elasticity of demand for two goods is -4.5, then
there is an imbalance between the quantity supplied by sellers and the quantity demanded by buyers
In a market with a binding price control,
can respond substantially to a change in price
In the long run, the quantity supplied of most goods
A decrease in price of 2% causes an increase in quantity demanded of 0%.
In which of these instances is demand said to be perfectly inelastic?
all of these are possible results of rent controls
Rent controls can cause
inelastic in the short run and elastic in the long run
The supply of oil is likely to be
demand for motor oil would tend to be inelastic
There are very few, if any, good substitutes for motor oil. Therefore, the
and the effective price received by sellers both decrease
When a tax is placed on the buyers of cell phones, the size of the cell phone market
Buyers and sellers share the burden of the tax
Which of the following statements is correct concerning the burden of a tax imposed on take-out food?
the mayor thinks demand is inelastic, and the city manager thinks demand is elastic
You are in charge of the local city-owned aquatic center. You need to increase the revenue generated by the aquatic center to meet expenses. The mayor advises you to increase the price of a day pass. The city manager recommends reducing the price of a day pass. You realize that
determine the price elasticity of demand for massages
You have just been hired as a business consultant to determine what pricing policy would be appropriate to increase the total revenue of a therapeutic massage spa. The first step you would take would be to
a binding price ceiling is removed
A shortage is eliminated when
always determined by the interaction of the demand and supply side of the market
The incidence of a tax is
