Econ Final 3

In which of the following situations would supply be the most elastic? An auto parts manufacturer is operating at capacity. A hotel has all of its rooms booked for each night of the next 3 months. A furniture manufacturer is operating its factory 8 hours per day. A real estate developer in Boston is looking to build condos on the waterfront.

A furniture manufacturer is operating its factory 8 hours per day.

Suppose the equilibrium price of a tube of toothpaste is $2, and the government imposes a price floor of $3 per tube. quantity demanded decreases. All of the others are correct. quantity supplied increases. there is a surplus.

All of the others are correct.

A person who takes a prescription drug to control high cholesterol most likely has a demand for that drug that is unit elastic. inelastic. elastic. highly responsive to changes in income.

Inelastic

When the price of candy bars is $1.00, the quantity demanded is 500 per day. When the price falls to $0.80, the quantity demanded increases to 600. Given this information and using the midpoint method, we know that the demand for candy bars is unit elastic. elastic. inelastic. perfectly inelastic.

Inelastic

Which of the following is likely to have the most price inelastic demand? hardback novels salt white chocolate chip with macadamia nut cookies box seats at a major league baseball game

Salt

Which of the following is the most likely explanation for the imposition of a price floor on the market for corn? Buyers of corn, recognizing that the price floor is good for them, have pressured policymakers into imposing the price floor. Sellers of corn, recognizing that the price floor is good for them, have pressured policymakers into imposing the price floor. Buyers and sellers of corn have agreed that the price floor is good for both of them and have therefore pressured policy makers into imposing the price floor. Policymakers have studied the effects of the price floor carefully, and they recognize that the price floor is advantageous for society as a whole.

Sellers of corn, recognizing that the price floor is good for them, have pressured policymakers into imposing the price floor.

Using the midpoint method, the price elasticity of demand for a good is computed to be approximately 75. Which of the following events is consistent with a 10 percent decrease in the quantity of the good demanded? a 7.5 increase in the price of the good an increase in the price of the good from $10 to $17.50 a 13.33 percent increase in the price of the good an increase in the price of the good from $7.50 to $10

a 13.33 percent increase in the price of the good

A price ceiling will be binding only if it is set equal to the equilibrium price. either above or below the equilibrium price. below the equilibrium price. above the equilibrium price.

below the equilibrium price.

Demand is said to be price elastic if buyers respond substantially to changes in the price of the good buyers do not respond much to changes in the price of the good. the price of the good responds substantially to changes in demand. demand shifts substantially when income or the expected future price of the good changes.

buyers respond substantially to changes in the price of the good

If a tax is imposed on a market with inelastic demand and elastic supply, then the burden of the tax will be shared equally between buyers and sellers. buyers will bear most of the burden of the tax. sellers will bear most of the burden of the tax. it is impossible to determine how the burden of the tax will be shared.

buyers will bear most of the burden of the tax.

The tax burden will fall most heavily on buyers of the good when the demand curve is relatively flat, and the supply curve is relatively steep. is relatively steep, and the supply curve is relatively flat. and the supply curve are both relatively flat. and the supply curve are both relatively steep.

is relatively steep, and the supply curve is relatively flat.

Suppose the government imposes a 25-cent tax on the buyers of incandescent light bulbs. Which of the following is not correct? The tax would discourage market activity. lower the equilibrium price by 25 cents. shift the demand curve downward by 25 cents. reduce the equilibrium quantity.

lower the equilibrium price by 25 cents.

A tax imposed on the buyers of a good will raise the effective price received by sellers and lower the equilibrium quantity. price paid by buyers and lower the equilibrium quantity. effective price received by sellers and raise the equilibrium quantity. price paid by buyers and raise the equilibrium quantity.

price paid by buyers and lower the equilibrium quantity.

Suppose the government imposes a 30-cent tax on the sellers of soft drinks. Which of the following is not correct? The tax would reduce the equilibrium quantity. discourage market activity. raise the equilibrium price by 30 cents. shift the supply curve upward by 30 cents.

raise the equilibrium price by 30 cents.

The local bakery makes such great cinnamon rolls that consumers do not respond much at all to a change in the price. If the owner is only interested in increasing revenue, she should reduce costs. lower the price of the cinnamon rolls. leave the price of the cinnamon rolls unchanged. raise the price of the cinnamon rolls.

raise the price of the cinnamon rolls.

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

serves as an example of a price ceiling.

As we move downward and to the right along a linear, downward-sloping demand curve, slope changes but elasticity remains constant. both slope and elasticity change. slope remains constant but elasticity changes. both slope and elasticity remain constant.

slope remains constant but elasticity changes.

A minimum wage that is set above a market's equilibrium wage will result in an excess supply of labor, that is, unemployment. demand for labor, that is, a shortage of workers. supply of labor, that is, a shortage of workers. demand for labor, that is, unemployment.

supply of labor, that is, unemployment.

If the cross-price elasticity of demand for two goods is 1.25, then the two goods are substitutes. the two goods are luxuries. the demand for one of the goods conforms to the law of demand, but the demand for the other good violates the law of demand. one of the goods is normal and the other good is inferior.

the two goods are substitutes.