Quiz #2

Assume the supply curve shifts to the right by a given amount at each price. Price in the market will decline the most if demand is more:

Price inelastic and supply is more price inelastic

The equilibrium price is often considered to be "just right" because

-It equates the amount supplied with the amount demanded -It does not result in a shortage -It does not result in a surplus

The equilibrium price in a market is established subject to the all other thins unchanged condition and, therefore, very well may change due to:

A change in the price of resource inputs used to produce the good

Economists in general agree that rent controls are:

An inefficient and ineffective way to help low-income families

There are several close substitutes for Bayer aspirin but fewer substitutes for a complete medical examination. Therefore, you would expect the demand for:

Bayer aspirin to be more price elastic

Price controls:

Can result in inequitable outcomes

Those who make economic policy concerning price controls often do so in order to:

Establish a more equitable result based on normative judgements

A shirt manufacturer sold 10 dozen shirts per day when the price was $4 per shirt but sold 15 dozen shirts per day when the price was $3 per shirt. Hence, the absolute value of the price elasticity of demand is:

Greater than 1 but less than 3

When price does down, the quantity demanded goes up. Price elasticity measures:

How responsive the quantity change is in relation to the price change

A market price support policy establishes a price floor, which:

Increase the price received by farmers

If your purchases of shoes decrease from 11 pairs per year to 9 pairs per year when your income increase from $19,000 to $21,000 a year, then for you, shoes are considered a(n):

Inferior good

If your income increases and you consumption of bagels increases, bagels are considered a(n):

Normal good

Suppose that the price elasticity of demand for grapefruit is -2.8. The introduction of a new variety that is cheaper to grow should cause consumer expenditures for grapefruit to:

Rise

If the price of chocolate-covered peanuts increases and the demand for strawberry licorice twists increases, this indicates that these two goods are:

Substitute goods

The concept of elasticity is most closely related to:

The law of demand

Elasticity is:

The ratio of the percentage change in a dependent variable to the percentage change in a independent variable

The price elasticity of supply measures:

The responsiveness of quantity supplied to changes in prices

The concept of price elasticity of supply can be applied to labor:

To show how the quantity of labor supplied responds to changes in wages and salaries

The price elasticity of demand for gasoline in the long run has been estimated to be -1.5. If an extended war in the Middle-East caused the price of oil (from which gasoline is made) to increase and remain high for a decade, how would that affect total expenditures on gasoline in the long run, all other things unchanged?

Total expenditures would fall

Whenever supply increase, the resulting market price will always be lower except:

When demand is perfectly price elastic (when the demand curve is horizontal)