Econ chapter 4,5,6 quizzes

If a 25% change in price results in a 40% change in quantity supplied, then the price elasticity of supply is about a.1.60, and supply is elastic. b.0.63, and supply is elastic. c.0.63, and supply is inelastic. d.1.60, and supply is inelastic.

a

In a competitive market free of government regulation, a.price adjusts until quantity demanded equals quantity supplied. b.supply adjusts to meet demand at every price. c.price adjusts until quantity demanded is less than quantity supplied. d.price adjusts until quantity demanded is greater than quantity supplied. e.supply and demand adjust until quantity demanded equals quantity supplied.

a

Suppose there is a 6 percent increase in the price of good X and a resulting 6 percent decrease in the quantity of X demanded. Price elasticity of demand for X is a. 1 b. 0. c.36 d.6

a

The discovery of a new hybrid wheat would increase the supply of wheat. As a result, wheat farmers would realize an increase in total revenue if the a.demand for wheat is elastic. b.supply of wheat is elastic. c.supply of wheat is inelastic. d.demand for wheat is inelastic.

a

To determine whether a good is considered normal or inferior, one could examine the value of the a.income elasticity of demand for that good. b.price elasticity of demand for that good. c.price elasticity of supply for that good. d. cross-price elasticity of demand for that good.

a

A manufacturer produces 400 units when the market price of $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. 2.0 b. 2.2 c.200 d. .45

b

For which of the following goods is the income elasticity of demand likely highest? a. water b. diamonds c. hamburgers d. housing

b

Knowing that the demand for wheat is inelastic, if all farmers voluntarily did not plant wheat on 10 percent of their land, then a.wheat farmers would suffer a reduction in their total revenue. b.wheat farmers would experience an increase in their total revenue. c.the demand for wheat would decrease. d.consumers of wheat would buy more wheat.

b

Scenario 5-2 The supply of aged cheddar cheese is inelastic, and the supply of bread is elastic. Both goods are considered to be normal goods by a majority of consumers. Suppose that a large income tax increase decreases the demand for both goods by 10%. Refer to Scenario 5-2. The change in equilibrium price will be a.the same in the aged cheddar cheese and bread markets. b.greater in the aged cheddar cheese market than in the bread market. c.greater in the bread market than in the aged cheddar cheese market.

b

Scenario 5-3 Milk has an inelastic demand, and beef has an elastic demand. Suppose that a mysterious increase in bovine infertility decreases both the population of dairy cows and the population of beef cattle by 50 percent. Refer to Scenario 5-3. Total consumer spending on milk will a.decrease, and total consumer spending on beef will decrease. b.increase, and total consumer spending on beef will decrease. c.decrease, and total consumer spending on beef will increase. d.increase, and total consumer spending on beef will increase.

b

Suppose good X has a positive income elasticity of demand. This implies that good X could be (i)a normal good. (ii)a necessity. (iii)an inferior good. (iv)a luxury. a.i and ii b. i and ii and iv c. iii d. i

b

The smaller the price elasticity of demand, the a.more strongly buyers respond to a change in price between any two prices P1 and P2. b.smaller the decrease in equilibrium price when the supply curve shifts rightward from S1 to S2. c. steeper the demand curve will be through a given point. d. flatter the demand curve will be through a given point.

c

If the price elasticity of demand for a good is 10.0, then a 4 percent increase in price results in a a.2.5 percent decrease in the quantity demanded. b. 4 percent decrease in the quantity demanded. c. 40 percent decrease in the quantity demanded. d. 0.4 percent decrease in the quantity demanded.

c

If the price elasticity of supply is 1.2, and price increased by 5%, quantity supplied would a. increase by 4.2% b.decrease by 4.2% c.increase by 6% d.decrease by 6%

c

Scenario 5-2 The supply of aged cheddar cheese is inelastic, and the supply of bread is elastic. Both goods are considered to be normal goods by a majority of consumers. Suppose that a large income tax increase decreases the demand for both goods by 10%. Refer to Scenario 5-2. The equilibrium price will a.increase in the aged cheddar cheese market and decrease in the bread market. b.decrease in the aged cheddar cheese market and increase in the bread market. c.decrease in both the aged cheddar cheese and bread markets. d.increase in both the aged cheddar cheese and bread markets.

c

The presence of a price control in a market for a good or service usually is an indication that a.policymakers believed that the price that prevailed in that market in the absence of price controls was creating shortages. b.the usual forces of supply and demand were not able to establish an equilibrium price in that market. c.policymakers believed that the price that prevailed in that market in the absence of price controls was unfair to buyers or sellers. d.an insufficient quantity of the good or service was being produced in that market to meet the public's need. e.policymakers correctly believed that, in that market, price controls would generate no inequities of their own.

c

a decrease in quantity demanded a. shifts the demand curve to the left b. shifts the demand curve to the right c. results in a movement upward and to the left along a demand curve d. results in a movement downward and to the right along a demand curve

c

an increase 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

c

if a seller in a competitive market chooses to charge more than the going price then a. the sellers' profits must increase b. other sellers would also raise their prices c. buyers will make purchases from other sellers d. the owners of the raw materials used in production would raise the prices for the raw materials

c

if at the current price there is a shortage of a good then a. the market must be in equilibrium b. sellers are producing more than buyers wish to buy c. the price is below the equilibrium price d. quantity demanded equals quantity supplied

c

Which of the following is the most likely explanation for the imposition of a price ceiling on the market for milk? a.Buyers of milk, recognizing that the price ceiling is good for them, have pressured policymakers into imposing the price ceiling. b.Sellers of milk, recognizing that the price ceiling is good for them, have pressured policymakers into imposing the price ceiling. c.Policymakers have studied the effects of the price ceiling carefully, and they recognize that the price ceiling is advantageous for society as a whole. d.Buyers and sellers of milk have agreed that the price ceiling is good for both of them and have therefore pressured policymakers into imposing the price ceiling. e.Buyers of milk, recognizing that the price ceiling is bad for them, have pressured policymakers into imposing the price ceiling on sellers only.

a

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

a

a movement downward and to the right along a demand curve is called a(n) a. increase in quantity demanded b. decrease in demand c. decrease in quantity demanded d. increase in demand

a

at the equilibrium price, the quantity of the good that buyers are willing are able to buy a. exactly equals the quantity that sellers are willing and able to sell b. is less that the quantity that sellers are willing and able to sell c. is greater than the quantity that sellers are willing and bale to sell

a

holding the nonprice determinants of supply constant a change in price would a. result in a movement along a stationary supply curve b.have no effect on the quantity supplied c. results in a shift of demand d. results in either a decrease in supply or an increase in supply

a

if a price ceiling is a binding constraint on a market then a.buyers cannot buy all they want to buy at the price ceiling. b.the quantity supplied must exceed the quantity demanded. c.the equilibrium price must be below the price ceiling. d.buyers can buy all they want to buy at the price ceiling. e.sellers cannot sell all they want to sell at the price ceiling.

a

if the minimum wage exceeds the equilibrium wage then a.the quantity supplied of labor will exceed the quantity demanded. b.there will be no unemployment. c.the quantity supplied of labor will equal the quantity demanded. d.the minimum wage will not be binding. e.the quantity demanded of labor will exceed the quantity supplied.

a

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

a

suppose the US had a short-term shortage of farmers which mechanisms would adjust to remove the shortage a. the prices of food and the wages of farmers would adjust b. the government would subsidize the production of food c.there are no mechanisms to remove the shortage d. the government would provide tax incentives to encourage people to become farmers

a

when a supply curve is relatively flat a. supply is relatively elastic b. sellers are not very responsive to changes in price c. supply is relatively inelastic

a

whether a good is luxury of necessity depends on the a. preferences of the buyer b. price of the good c. scarcity of the good d. intrinsic properties of the good

a

Suppose the price elasticity of supply for minivans is 0.3 in the short run and 1.2 in the long run. If an increase in the demand for minivans causes the price of minivans to increase by 5%, then the quantity supplied of minivans will increase by about a.16.7% in the short run and 4.2% in the long run. b.1.5% in the short run and 6% in the long run. c.4.2% in the short run and 16.7% in the long run. d.6% in the short run and 1.5% in the long run.

b

a decrease in the price of a good will a.decrease quantity demanded b. increase quantity demanded c. increase demand d. decrease demand

b

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

b

a university's football stadium is never more than half-full during football games this indicates a. nothing about the equilibrium price b. the ticket price is above the equilibrium price c. the ticket price is below the equilibrium price d. the ticket price is at the equilibrium price

b

if a non binding price ceiling is imposed on a market then a.the quantity sold in the market will decrease. b.the quantity sold in the market will stay the same. c.the price in the market will increase. d.the quantity sold in the market will increase. e.the price in the market will decrease.

b

if a price floor is not binding then a. it has no legal enforcement mechanism. b.the equilibrium price is above the price floor. c.the equilibrium price is below the price floor. d.More than one of the above is correct. e.None of the above are correct.

b

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

b

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

b

the price elasticity of demand measures how much a. demand responds to a change in supply b. quantity demanded responds to a change in price c. quantity demanded responds to a change in income d. price responds to a change in demand

b

which of the following is correct a. Rent control is an example of a price floor, and the minimum wage is an example of a price ceiling. b. Rent control is an example of a price ceiling, and the minimum wage is an example of a price floor. c. Rent control and the minimum wage are both examples of price floors. d. Rent control and the minimum wage are both examples of price ceilings. e. None of the above are correct.

b

which of the following statements is correct? a. buyers determine both demand and supply b. buyers determine demand, and sellers determine supply c. sellers determine both demand and supply d. buyers determine supply, and sellers determine demand

b

which of the following would not shift the supply curve for mp3 players a. a decrease in the number of sellers of mp3 players b. an increase in the price of mp3 players c. an improvement in the technology used to produce mp3 players d. an increase in the price of plastic an input into the production of mp3 platers

b

long lines a.and discrimination according to seller bias are both inefficient rationing mechanisms because they both waste buyers' time. b.are an efficient rationing mechanism because they don't waste buyers' time, and discrimination according to seller bias is an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly. c.are an inefficient rationing mechanism because they waste buyers' time, and discrimination according to seller bias is an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly. d.are an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly, and discrimination according to seller bias is an inefficient rationing mechanism because it wastes buyers' time. e.and discrimination according to seller bias are both inefficient rationing mechanisms because the good does not necessarily go to the buyer who values it most highly.

c

An increase in the price of cheese crackers from $2.25 to $2.45 per box causes suppliers of cheese crackers to increase their quantity supplied from 125 boxes per minute to 145 boxes per minute. Using the midpoint method, supply is a.inelastic, and the price elasticity of supply is 0.57. b.elastic, and the price elasticity of supply is 0.57. c.inelastic, and the price elasticity of supply is 1.74. d.elastic, and the price elasticity of supply is 1.74.

d

If the price elasticity of demand for a good is 4, then a 12 percent decrease in price results in a a.0.33 percent increase in the quantity demanded. b. 3 percent increase in the quantity demanded. c.30 percent increase in the quantity demanded. d.48 percent increase in the quantity demanded.

d

If the price elasticity of supply is 1.5, and a price increase led to a 3% increase in quantity supplied, then the price increase is about a. 4.5% b. .5% c. .2% d. 2.0%

d

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 time horizon 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 availability of close substitutes in determining the price elasticity of demand.

d

Which of the following statements is correct? a.The demand for cardboard is more elastic over a long period of time than over a short period of time. b.The demand for grandfather clocks is more elastic than the demand for clocks in general. c.The demand for flat-screen computer monitors is more elastic than the demand for monitors in general. d.All of the above are correct.

d

While in college, John and Bethany each buy five packages of mac-n-cheese per week. After they graduate and have full-time jobs, John buys six packages per week, but Bethany buys only two packages per week. When looking at income elasticity of demand for mac-n-cheese, John's a.is zero, and Bethany's approaches infinity. b.approaches infinity, and Bethany's is zero. c.is negative, and Bethany's is positive. d.is positive, and Bethany's is negative.

d

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 increases c. three months after the price increase d. one year after the price increase

d

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

d

in a competitive market, the price of a product a. and the quantity of the product produced are both determined by sellers b. is determined by buyers and the quantity of the product produced is determined by sellers c. is determined by sellers, and the quantity of the product produced is determined by buyers d. none of the above

d

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

d

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

d

when quantity demanded increases at every possible price the demand curve a. not shifted rather the demand curve has become steeper b. not shifted rather we have moved along the demand curve to a new point on the same curve c. shift to the left d. shift to the right

d

when we move along a given demand curve a. all determinants of quantity demanded are held constant b. only price is held constant c. income and price are held constant d. all nonprice determinants of demand are held constant

d

which of the following events must cause equilibrium price to rise a. demand and supply both decreases b. demand decreases and supply increases c. demand and supply both increase d. demand increases and supply decreases

d

who gets scarce resources in a market economy a. the government b. whoever the government decided gets them c. whoever wants them d. whoever is willing and able to pay the price

d

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

e

A minimum wage that is set below a market's equilibrium wage will result in a.an excess supply of labor, that is, unemployment. b.an excess demand for labor, that is, unemployment. c.All of the above are correct. d.an excess demand for labor, that is, a shortage of workers. e.None of the above is correct.

e

One economist has argued that rent control is "the best way to destroy a city, other than bombing." Why would an economist say this? a.He fears that rent controls will cause a construction boom, which will make the city crowded and more polluted. b.He fears that rent control will benefit landlords at the expense of tenants, increasing inequality in the city. c.He fears that low rents will cause low-income people to move into the city, reducing the quality of life for other people. d.He fears that without rent control the market will eliminate the incentive to maintain buildings, leading to a deterioration of the city. e.He fears that rent control will eliminate the incentive to maintain buildings, leading to a deterioration of the city.

e

price ceilings and price floors that are binding a. are imposed because they can make everyone in the economy better off. b. are desirable because they make markets more efficient and more fair. c. are imposed because they can make the poor in the economy better off without causing adverse effects. d. can have the effect of restoring a market to equilibrium. e.cause surpluses and shortages to persist since price cannot adjust to the market equilibrium price.

e

rent-control laws dictate a. a minimum rent that landlords may charge tenants. b.the exact rent that landlords must charge tenants. c.rents in markets where supply and demand do not reach equilibrium. d.a minimum rent and a maximum rent that landlords may charge tenants. e.a maximum rent that landlords may charge tenants.

e