quiz 2b

If a 15% increase in price for a good results in a 20% decrease in quantity demanded, the price elasticity of demand is Question 2 options: 0.75. 1.25. 1.33. 1.60.

1.33.

Which of the following could be the price elasticity of demand for a good for which an increase in price would decrease revenue? Question 7 options: 0 0.5 1 1.5

1.5

Which of the following could be the price elasticity of demand for a good for which an increase in price would increase revenue? Question 5 options: 0.2 1 1.5 All of the above could be correct.

0.2

Which of the following could be the price elasticity of demand for a good for which a decrease in price would decrease revenue? Question 6 options: 0.5 1 1.5 All of the above could be correct.

0.5

If a 20% increase in price for a good results in a 15% decrease in quantity demanded, the price elasticity of demand is Question 3 options: 0.75. 1.25. 1.33. 1.60.

0.75.

Which of the following could be the price elasticity of demand for a good for which a decrease in price would increase revenue? Question 4 options: 0 0.2 1 2.1

2.1

Under which of the following conditions would the interdiction of illegal drugs result in a decrease in the quantity of drugs sold and in a decrease in total spending on illegal drugs by drug users? Question 16 options: The interdiction has the effect of shifting the demand curve for illegal drugs to the right. The price elasticity of demand for illegal drugs is 1.3. The price elasticity of supply for illegal drugs is 0.8. As a result of the interdiction, the price of illegal drugs increases by 20 percent and the quantity of illegal drugs sold decreases by 16 percent.

The price elasticity of demand for illegal drugs is 1.3.

Scenario 5-4 Suppose the government is concerned about firms in the United States importing illegal caviar. As a result, the government increases border patrols to catch illegal shipments. U.S. Customs agents perform DNA testing on the caviar to determine if it comes from endangered species of fish. If so, the government destroys the caviar. Refer to Scenario 5-4. What would we expect to observe in the caviar market? Question 15 options: Equilibrium prices and quantities will increase. Equilibrium prices will increase by more if the demand for caviar is elastic than if demand is inelastic. Total revenues to caviar firms will increase if the demand for caviar is inelastic. All of the above are correct.

Total revenues to caviar firms will increase if the demand for caviar is inelastic.

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 Question 9 options: increase in both the aged cheddar cheese and bread markets. increase in the aged cheddar cheese market and decrease in the bread market. decrease in the aged cheddar cheese market and increase in the bread market. decrease in both the aged cheddar cheese and bread markets.

decrease in both the aged cheddar cheese and bread markets.

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. The equilibrium quantity will Question 13 options: increase in both the milk and beef markets. increase in the milk market and decrease in the beef market. decrease in the milk market and increase in the beef market. decrease in both the milk and beef markets.

decrease in both the milk and beef markets.

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 Question 14 options: increase, and total consumer spending on beef will increase. increase, and total consumer spending on beef will decrease. decrease, and total consumer spending on beef will increase. decrease, and total consumer spending on beef will decrease.

decrease, and total consumer spending on beef will decrease.?????????

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. The equilibrium price will Question 12 options: increase in both the milk and beef markets. increase in the milk market and decrease in the beef market. decrease in the milk market and increase in the beef market. decrease in both the milk and beef markets.

increase in both the milk and beef markets.

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. Total consumer spending on aged cheddar cheese will Question 11 options: increase, and total consumer spending on bread will increase. increase, and total consumer spending on bread will decrease. decrease, and total consumer spending on bread will increase. decrease, and total consumer spending on bread will decrease.

increase, and total consumer spending on bread will decrease.?????

The difference between slope and elasticity is that slope Question 1 options: is a ratio of two changes, and elasticity is a ratio of two percentage changes. is a ratio of two percentage changes, and elasticity is a ratio of two changes. measures changes in quantity demanded more accurately than elasticity. none of the above; there is no difference between slope and elasticity.

is a ratio of two changes, and elasticity is a ratio of two percentage changes.

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 quantity will be Question 10 options: greater in the aged cheddar cheese market than in the bread market. greater in the bread market than in the aged cheddar cheese market. the same in the aged cheddar cheese and bread markets. Any of the above could be correct.

the same in the aged cheddar cheese and bread markets.

A manufacturer produces 1,000 units, regardless of the market price. For this firm, the price elasticity of supply is Question 8 options: infinity. zero. one. negative one.

zero