ECON 1001-004 Microeconomics SPR 2023

The cross elasticity of demand between cigarettes and lighters is -0.50. The price of cigarettes rises by 10%. What happens to the sales of lighters? A. Falls by 5% B. Falls by 20% C. Rises by 5% D. Not enough information

A. Falls by 5%

On a demand and supply graph, if a tax is implemented on a buyer, the vertical distance between the old and new demand curves at the new equilibrium quantity will be equivalent to the: A. amount of the tax B. economic burden of the tax on the buyer C. economic burden of the tax on the seller D. price of the item

A. amount of the tax

The most likely reason that the government would implement a price _____ is because it feels that the price is too high for _____. A. ceiling ; consumers B. floor ; consumers C. ceiling ; producers D. floor ; producers

A. ceiling ; consumers

A tax on sellers shifts the: A. supply curve to the left B. supply curve to the right C. demand curve to the left D. demand curve to the right

A. supply curve to the left

The incidence of a tax is: A. The same as the statutory burden of the tax B. The division of the economic burden of a tax between buyers and sellers C. Determined by the government D. The same dollar amount as the subsidy on an item

B. The division of the economic burden of a tax between buyers and sellers

If the price is below the equilibrium level, then the quantity demanded will _________ the quantity supplied. This is known as _________. A. exceed; a price floor B. exceed; a shortage C. be less than; shortage D. equal; equilibrium

B. exceed; a shortage

The price elasticity of demand measures the: A. responsiveness of quantity demanded to a change in quantity supplied B. responsiveness of price to a change in quantity demanded C. responsiveness of quantity demanded to a change in price D. responsiveness of quantity demanded to a change in income

C. responsiveness of quantity demanded to a change in price

The price elasticity of demand for a good is -0.40. By how much must the price of the good decrease in order for sales to rise by 12%? A. 3% B. 4.8% C. 12.4% D. 30%

D. 30%

A subsidy for buyers of a product shifts the: A. supply curve to the left B. supply curve to the right C. demand curve to the left D. demand curve to the right

D. demand curve to the right

If you lived in a _____ economy, you would expect prices to move _____, whereas if you lived in a _____ economy, that is not likely. A. market ; towards equilibrium ; planned B. planned ; towards equilibrium ; market C. planned ; only along the market demand curve; market D. planned ; only along the market supply curve; barter

A. market ; towards equilibrium ; planned

Your local government decides it wants to curb the use of pesticides and is considering two policies to achieve this goal: a binding price floor and a tax. Which policy are pesticide sellers most likely to prefer? A. the price floor B. the tax C. the seller wouldn't prefer one policy over another D. it depends on factors not described in the scenario

A. the price floor

If there is a technological advance in the production of the Amazon Echo smart speaker, you would expect to see ______ over time. A. A rise in its equilibrium price B. A fall in its equilibrium price C. No change in its equilibrium price D. A fall in the equilibrium quantity sold

B. A fall in its equilibrium price

In economic markets, a quota is a: A. Minimum quantity of a good that can be bought or sold B. Maximum quantity of a good that can be bought or sold C. Maximum price at which a good can be bought or sold D. Minimum price at which a good can be bought or sold

B. Maximum quantity of a good that can be bought or sold

Are markets always in equilibrium? A. No, they never "settle down" into a stable price and quantity B. No, but if there is no outside interference, they tend to move toward equilibrium C. Yes, because very few things tend to alter supply and demand D. Yes, they are always at the equilibrium point, or very close to it

B. No, but if there is no outside interference, they tend to move toward equilibrium

Many cooks view butter and margarine to be substitutes. If the price of butter rises, then in the market for margarine: A. the equilibrium price will fall and the equilibrium quantity will fall B. both the equilibrium price and quantity will rise C. the equilibrium price will rise and the equilibrium quantity will decrease D. the equilibrium price will rise, while the change to equilibrium quantity is indeterminate

B. both the equilibrium price and quantity will rise

If the demand curve is perfectly elastic, then an increase in supply will: A. decrease the price but result in no change in the quantity exchanged B. increase the quantity exchanged but result in no change in the price C. increase the price but result in no change in the quantity exchanged D. increase both the price and the quantity exchanged

B. increase the quantity exchanged but result in no change in the price

Demand is said to be _____________ when the quantity demanded is not very responsive to changes in price. A. independent B. inelastic C. unit elastic D. elastic

B. inelastic

In a perfectly competitive market, if the quantity demanded exceeds the quantity supplied, we expect prices to: A. stay the same B. rise C. fall D. rise first, then fall when demand decreases

B. rise

Some states have ______, which imposes an upper limit on the interest rate that lenders can charge. A. pricing laws B. usury laws C. price floor laws D. minimum interest rate

B. usury laws

Suppose that Bobo purchases 1 pizza per month when the price is $19 and 3 pizzas per month when the price is $15. What is the price elasticity of Bobo's demand curve? A. -0.235 B. -2.0 C. -4.25 D. -6.33

C. -4.25

The imposition of a price ceiling on a market often results in: A. an increase in investment in the industry B. a surplus C. a shortage D. a decrease in discrimination on the part of sellers

C. a shortage

A tax on sellers would not cause a decrease in quantity sold if: A. supply is inelastic B. there are few competing products C. demand is perfectly inelastic D. demand is perfectly elastic

C. demand is perfectly inelastic

The longer the time period considered, the elasticity of supply tends to: A. decrease B. remain constant C. increase D. converge to zero

C. increase

The government is considering taxing e-cigarettes to both discourage the use of e-cigarettes and raise revenues for public health and education programs. To maximize revenues from the tax, the government should tax e-cigarette: A. buyers B. sellers C. sellers and manufacturers but not buyers D. Buyers, sellers, or manufacturers; it doesn't matter which

D. Buyers, sellers, or manufacturers; it doesn't matter which

An equilibrium in a market occurs: A. At the halfway point on a demand curve B. At the halfway point on the price axis C. When suppliers have sold all the goods and services that they have produced D. When the quantity supplied equals the quantity demanded

D. When the quantity supplied equals the quantity demanded

A price cut will increase the total revenue a firm receives if the demand for its product is: A. unit dependent B. unit elastic C. inelastic D. elastic

D. elastic

The system of taxicab medallions in New York City is an example of a: A. price subsidy B. non-binding price ceiling C. price floor D. quantity control

D. quantity control

Whenever there is a surplus at a particular price, the quantity sold at that price will equal: A. (quantity demanded plus quantity supplied)/2 B. the quantity supplied at that price C. the quantity supplied minus the quantity demanded D. the quantity demanded at that price

D. the quantity demanded at that price