Module 2 & 3 video quizes

The long-run elasticity of oil demand has been estimated at -0.5. If the price of oil rises by 10%, how much will the quantity of oil demanded fall? * a. 5% b. 0.5% c. 2% d. 20%

5% D= -.5*10%

France has the largest long-run elasticity of oil demand (-0.6) of any of the large, rich countries, according to Cooper's estimates. Does this mean that France is better at responding to long-run price changes than other rich countries, or does it mean France is worse at responding? * a. Better at responding b. Worse at responding

Better at responding

Which of the following two goods is more likely to be I elastically demanded Demand for beef the next month Demand for beef over the next decade

Demand for beef the next month

Which of the following two goods is more likely to be inelastically demanded? Demand for tangerine Demand for fruit

Demand for fruit

Which of the following two goods is more likely to be Inelastically demanded Demand for Exxon gas at corner of 7th and grand Demand for gas in the entire city

Demand for gas in the entire city

Which of the following two goods is more likely to be Inelastically demanded Demand for insulin Demand for vitamins

Demand for insulin

Along a supply curve, if the price of oil falls, what will happen to the quantity of oil supplied?

It will decrease

How are rent controls related to building collapses in India? * a. Low rent means landlords may not take in enough revenue to fund repairs. b. Social unrest stemming from rent control has led Mumbai's poor to vandalize apartment buildings. c. Scarce housing has incentivized the city to leave standing very old buildings that should be demolished for safety. d. All of the above

Low rent means landlords may not take in enough revenue to fund repairs.

After a public information campaign highlighting that bacteria and other organisms cause and spread disease, will the demand curve for soap be more elastic or more inelastic? More elastic More inelastic

More inelastic

After economic boom, will demand curve for tvs be more elastic or more inelastic

More inelastic

If the elasticity of demand for college textbooks is -0.1, and the price of textbooks increases by 20%, how much will the quantity demanded change, and in what direction? * a. The quantity demanded increases by 2% b. The quantity demanded decreases by 20% c. The quantity demanded decreases by 2% d. The quantity demanded remains the same

Recall that elasticity = (% change in quantity)/(% change in price). So - 0.1 = (% change in quantity)/(20%). That means that % change in quantity = 20% ×(-0.1) = -2%. The quantity demanded falls by 2%

The elasticity of demand is 1.1. Is the demand curve relatively steep or flat? Will a fall in price raise total revenue or lower it? Note: we present the elasticity in terms of its absolute value. * a. Relatively steep; raise total revenue b. Relatively flat; raise total revenue c. Relatively steep; lower total revenue d. Relatively flat; lower total revenue

Relatively flat; raise total revenue

The elasticity of demand is 2.0. Is the demand curve relatively steep or flat? Will a fall in price raise total revenue or lower it? Note: we present the elasticity in terms of its absolute value. *a. Relatively steep; raise total revenue b. Relatively flat; raise total revenue c. Relatively steep; lower total revenue d. Relatively flat; lower total revenue

Relatively flat; raise total revenue

The elasticity of demand is 0.9. Is the demand curve relatively steep or flat? Will a fall in price raise total revenue or lower it? Note: we present the elasticity in terms of its absolute value. * a. Relatively steep; raise total revenue b. Relatively flat; raise total revenue c. Relatively steep; lower total revenue d. Relatively flat; lower total revenue

Relatively steep; lower total revenue

Economist Austen Goolsbee estimated that the short-run elasticity of "income supply" for these executives was 1.4, while the long-run elasticity of "income supply" was 0.1. (Note: Goolsbee used a variety of statistical methods to look for these elasticities, and all came to roughly the same result.) If taxes pushed down their take-home income by 10%, how much would this cut the amount of income supplied in the short run? In the long run? a. Short run income would decrease 10%; long run income would decrease 1% b. Short run income would decrease 14%; long run income would decrease 1% c. Short run income would decrease 10%; long run income would decrease 2% d. Short run income would decrease 14%; long run income would decrease 2%

Short run income would decrease 14%; long run income would decrease 1%

Who is impacted most by a change in the minimum wage? *a. unionized workers b. senior citizens c. stay-at-home parents d. teenagers

Teenagers

When the price of Apple computers goes down, what probably happens to the demand for Windows-based computers?

The demand for Windows-based computers decreases

When the price of olive oil goes up, what probably happens to the demand for corn oil?

The demand for corn oil increases

When the price of petroleum goes up, what probably happens to the demand for natural gas?

The demand for natural gas increases

If everyone thinks that the price of tomatoes will go up next week, what is likely to happen to demand for tomatoes today?

The demand for tomatoes increases

If the elasticity of demand for spring break packages to Cancun is -5, and if you notice that this year in Cancun the quantity of packages demanded increased by 10%, then what happened to the price of Cancun vacation packages? * a. The price fell by 10 percent b. The price fell by 2 percent c. The price increased by 2 percent d. The price remained the same

The price fell by 2 percent P = -5*10%

If oil executives read in the newspaper that massive new oil supplies have been discovered under the Pacific Ocean but will likely only be useful in 10 years, what is likely to happen to the supply of oil today?

The supply of oil will rise today

If a new process for manufacturing diamonds is created, will the supply curve for diamonds become more elastic or more inelastic? * a. More elastic b. More inelastic

a. More elastic

If a larger share of oil output is required to make plastic, will the supply curve for plastic become more elastic or more inelastic? * a. More elastic b. More inelastic

b. More inelastic

Which of the following partially accounts for the scarcity of low-price real estate in Mumbai? * a. Resentment between renters and landlords has led landlords to find ways to increase prices. b. Political special interest groups put pressure on government to increase the price of real estate. c. A lengthy and costly approval process means developers must offer high-price homes in order to make a profit. d. Recent building collapses have scared away developers from new building projects in Mumbai.

A lengthy and costly approval process means developers must offer high-price homes in order to make a profit.

Henry Ford famously mass-produced cars at the beginning of the twentieth century, starting Ford Motor Company. He made millions because mass production made cars cheap to make, and he passed some of the savings to the consumer in the form of a low price. Cars became a common sight in the United States thereafter. Keeping total revenue and its relationship with price in mind, do you expect the demand for cars to be elastic or inelastic given the story of Henry Ford? *a. Elastic b. Inelastic

Elastic

If house developers started to build lots of new residential buildings in your college town, would they prefer demand for apartments is elastic or inelastic? (Hint: Revenue = Price * Quantity) *

Elastic

In your college town, the local government decrees that thousands of apartments close to campus are uninhabitable and must be torn down next semester. If you want to pay the lowest rent possible, should you hope that demand for apartments is elastic or inelastic? *a. Elastic b. Inelastic

Elastic

If a government decides to make health insurance affordable by requiring all health insurance companies to cut their prices by 30%, what will probably happen to the number of people covered by health insurance?

Fewer people will be covered because health insurance companies will supply less.

The long-run elasticity of oil demand has been estimated at -0.5. Does a 10% rise in oil prices increase or decrease total revenues to the oil producers? * a. Increase b. Decrease

Increase

If thousands of apartments are condemned in your college town, do landlords hope that demand for apartments is elastic or inelastic? (Once again, remember that Revenue = Price * Quantity)

Inelastic

In your college town, real estate developers are building thousands of new student-friendly apartments close to campus. If you want to pay the lowest rent possible, should you hope that demand for apartments is elastic or inelastic? * a. Elastic b. Inelastic

Inelastic

During the Middle Ages, salt was highly farmed with vast quality. Used salt instead of wood to build houses. Demand if wood more elastic ir inelastic

More elastic

A review of the jargon: Is the minimum wage a "price ceiling" or a "price floor?" * a. price ceiling b. price floor

Price floor

When a price ceiling is in place keeping the price below the market price, what's larger: quantity demanded or quantity supplied? * a. Quantity demanded. b. Quantity supplied. c. Indeterminate with the given information. d. Neither

Quantity demanded

The elasticity of demand is 0.2. Is the demand curve relatively steep or flat? Will a fall in price raise total revenue or lower it? Note: we present the elasticity in terms of its absolute value. * a. Relatively steep; raise total revenue b. Relatively flat; raise total revenue c. Relatively steep; lower total revenue d. Relatively flat; lower total revenue

Relatively steep; lower total revenue

Jon is on eBay, bidding for a first edition of the influential Frank Miller graphic novel Batman: The Dark Knight Returns. In this market, who is Jon competing with?

The other bidders

In the world of fashion, the power to imitate a trendy look is the power to make money. Stores like H&M and Forever 21 focus on imitating fashions wherever possible: As soon as they see that a new look is coming along, something people are willing to pay a high price for, they start cranking out that look. Do these imitation-centered stores make the supply of clothing more elastic or more inelastic? * a. More elastic b. Less elastic

a. More elastic

Which of the two goods is more likely to be elastically supplied? a. Supply of breakfast cereal b. Supply of food

a. Supply of breakfast cereal

Which of the two goods is more likely to be elastically supplied? a. Supply of construction workers in Binghamton, NY b. Supply of construction workers in New York State

a. Supply of construction workers in Binghamton, NY

A good is more elastic when * a. it is easy to produce more at the same cost b. it is made from rubber c. it is difficult to produce more at the same cost d. the marginal cost is equal to the price

a. it is easy to produce more at the same cost

In 1993, then President Clinton passed a law raising income taxes. This tax hike was fully expected: He campaigned on it in 1992. What do you expect happened to executive income in the first year of the tax increases? What about in subsequent years? Hint: Top executives have a lot of power over when they get paid for their work: They can ask for bonuses a bit earlier, or they can cash out their stock options a bit earlier. Literally, this isn't their "labor supply," it's more like their "income supply." *a. In the first year income will decrease; in the long run it will decrease b. In the first year income will decrease; in the long run it will remain nearly the same c. In the first year income will increase; in the long run it will decrease d. In the first year income will increase; in the long run it will remain nearly the same

b. In the first year income will decrease; in the long run it will remain nearly the same

Which of the following is NOT a consequence of rent controls in Mumbai? * a. There is a shortage of rental housing. b. Low cost rentals have incentivized migration to Mumbai, leading to overcrowding. c. Very few new and affordable housing is being developed. d. Already existing apartment buildings are crumbling from lack of maintenance. e. All of the above are consequences of rent controls in Mumbai.

b. Low cost rentals have incentivized migration to Mumbai, leading to overcrowding.

If pesticides and fertilizers are banned, will the supply curve for food become more elastic or more inelastic? * a. More elastic b. More inelastic

b. More inelastic

A lot of American action movies are quests to eliminate a villain. If in real life villains are elastically supplied (like guns for buyback programs), should we care whether the hero captures a particular villain? * a. Yes b. No

b. No

Which of the two goods is more likely to be elastically supplied? a. Supply of apples over the next growing season b. Supply of apples over the next decade

b. Supply of apples over the next decade

Which of the two goods is more likely to be elastically supplied? * a. Supply of gold b. Supply of computers

b. Supply of computers

For which of the following products would you expect the largest increase in price for the same increase in demand? * a. Flashlights b. Pens c. A first edition of Adam Smith's The Wealth of Nations d. Jeans

c. A first edition of Adam Smith's The Wealth of Nations

When the price of a good increases, the quantity demand

decreases

If we learn today about promising future energy sources, today's price of energy will _______ and today's quantity of energy will __________.

fall; rise

If the price of cars falls, are carmakers likely to make ___________.

fewer cars

After more employers allow employees to telecommute, will the demand curve for cars be more elastic or more inelastic?

more elastic

After the invention of nuclear power plants, will demand curve for coal power plants be more elastic or more inelastic

more elastic

Now, Jon is in Japan, trying to get a job as a full-time translator; he wants to translate English TV shows into Japanese and vice versa. He notices that the wage for translators is very low. Who is the "competition" that is pushing the wage down?

other translators

When price is above equilibrium price, greed (in other words, self-interest) tends to

push the price down

With these price controls on bread, would you expect bread quality to rise or fall?

quality falls

When supply falls, what happens to quantity demanded in equilibrium?

quantity demanded decreases

If the government forced all bread manufacturers to sell their products at a "fair price" that was half the current, free-market price, what would happen to the quantity supplied of bread?

quantity supplied decreases

If oil executives read in the newspaper that new solar-power technologies have been discovered but will likely only become useful in 10 years, what is the likely equilibrium impact on the price and quantity of oil today?

the price of oil will decrease, the quantity of oil will increase

When will people search harder for substitutes for oil?

when the price of oil is high