Quiz 3 example #38803

Demand is inelastic if the price elasticity of demand is a. less than 1 b. equal to 1 c. greater than 1 d. equal to 0

At a price of $12 per unit, sellers' total revenue equals $150 $200 $288 $364

The price elasticity of supply measures how responsive a. equilibrium price is to equilibrium quantity b. sellers are to a change in buyers' income c. sellers are to a change in price d. consumers are to the number of substitutes

Which of the following is not an example of public policy? a. rent-control laws b. minimum-wage laws c. taxes d. equilibrium laws

The minimum wage was instituted to ensure workers a. a middle-class standard of living b. employment c. a minimally adequate standard of living d. unemployment compensation

The equilibrium price in the market before the tax is imposed is a. $3.50 b. $5 c. $6 d. $7

A seller's opportunity cost measures the a. value of everything she must give up to produce a good b. amount she is paid for a good minus her cost of providing it c. consumer surplus d. out of pocket expenses to produce a good but not the value of her time

Which of the following events would increase producer surplus? a. sellers' costs stay the same and the price of the good increases b. sellers' costs increase and the price of the good stays the same c. sellers' costs increase and the price of the good decreases d. all of the above are correct

At equilibrium, total surplus is a. $26 b. $72 c. $108 d. $144

If the price of milk rises, when is the price elasticity of demand likely to be the lowest? a. immediately after the price increase b. one month after the price increase c. three months after the price increase d. one year after the price increase

Holding all other forces constant, when the price of gasoline rises, the number of gallons of gasoline demanded would fall substantially over a ten-year period because a. buyers tend to be much less sensitive to a change in price when given more time to react b. buyers tend to be more sensitive to a change in price when given more time to react c. buyers will have substantially more real income over a ten-year period d. the quantity supplied of gasoline increases very little in response to an increase in the price of gasoline

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

Which of the following is likely to have the most price inelastic demand? a. strawberry-banana milkshakes b. gasoline in the short run c. diamond earrings d. box seats at a major league baseball game

When demand is perfectly inelastic, the demand curve will be a. negatively sloped, because buyers decrease their purchases when the price rises b. vertical, because buyers purchase the same amount as before whenever the price rises or falls c. positively sloped, because buyers increase their purchases when price rises d. positively sloped, because buyers increase their total expenditures when prices rise

If a 6% decrease in price for a good results in a 2% increase in quantity demanded, the price elasticity of demand is a. 0.02 b. 0.33 c. 3 d. 4

As price falls from Pa to Pb, we could use the three demand curves to calculate three different value of price elasticity of demand. Which of the three demand curves would produce the smallest elasticity? a. D1 b. D2 c. D3 d. All of the above are equally elastic

Suppose the cross-price elasticity of demand between hot dogs and mustard is -2.00. This implies that a 20 percent increase in the price of hot dogs will cause the quantity of mustard purchased to a. fall by 200 percent b. fall by 40 percent c. rise by 200 percent d. rise by 40 percent

If the price elasticity of supply is 0.8, and price increased by 5%, quantity supplied would a. increase by 4% b. increase by 6.25% c. decrease by 4% d. decrease by 6.25%

The equilibrium price will a. increase in both the aged cheddar cheese and bread markets b. increase in the aged cheddar cheese market and decrease in the bread market c. decrease in the aged cheddar cheese market and increase in the bread market d. decrease in both the aged cheddar cheese and bread markets

The change in equilibrium price will be a. greater in the aged cheddar cheese market than in the bread market b. greater in the bread market than in the aged cheddar cheese market c. the same in the aged cheddar cheese market and the bread markets d. any of the above could be correct

A government imposed price of $12 in this market is an example of a a. binding price ceiling that creases a shortage b. non-binding price ceiling that creates a shortage c. binding price floor that creates a surplus d. non-binding price floor that creates a surplus

Which of the following price ceilings would be binding in this market? a. $8 b. $10 c. $12 d. $14

If the government imposes a price ceiling of $2 on this market, then there will be a. no shortage of the good b. a shortage of 40 units of the good c. a shortage of 60 units of the good d. a shortage of 85 units of the good

If the government imposes a price floor of $5 on this market, then there will be a. no surplus of the good b. a surplus of 20 units of the good c. a surplus of 30 units of the good d. a surplus of 55 units of the good

A price floor set at a. $4 will be binding and will result in a shortage of 3 units b. $4 will be binding and will result in a shortage of 6 units c. $7 will be binding and will result in a surplus of 6 units d. $7 will be binding and will result in a surplus of 12 units

In the 1970s, long lines at gas stations in the United States were primarily a result of the fact that a. OPEC raised the price of crude oil in world markets b. US gasoline producers raised the price of gasoline c. the US government maintained a price ceiling on gasoline d. Americans typically commuted long distances

Economists blame the long lines at gasoline stations in the US in the 1970s on a. US government regulations pertaining to the price of gasoline b. the Organization of petroleum Exporting Countries (OPEC) c. major oil companies operating in the US d. consumers who bought gasoline frequently, even when heir cars' gasoline tanks were nearly full

Which of the following is correct? a. Rent control and the minimum wage are both examples of price ceilings b. Rent control is an example of a price ceiling, and the minimum wage is an example of a price floor. c. Rent control is an example of a price floor, and the minimum wage is an example of a price ceiling d. Rent control and the minimum wage are both examples of price foors

Which of the following is not correct? a. Some states in the US mandate minimum wages above the federal level b. Most European nations have minimum-wage laws c. The US minimum wage is significantly higher than the minimum wages in France and the United Kingdom d. The US Congress first instituted a minimum wage with the Fair Labor Standards Act.

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

If a tax is levied on the sellers of a product, then the demand curve will a. shift down b. shift up c. become flatter d. not shift

If a tax is levied on the sellers of flour, then a. buyers will bear the entire burden of the tax b. sellers will bear the entire burden of the tax c. buyers and sellers will share the burden of the tax c. the government will bear the entire burden of the tax

Although law makers legislated a fifty-fifty division of the payment of the FICA tax, a. the actual tax incidence is unaffected by the legislated tax incidence b. the employer now is required by law to pay more than 50 percent of the tax c. the employee is now required by law to pay more than 50 percent of the tax d. employers are no longer required by law to pay any portion of the tax

Kelly is wiling to pay $68 for a pair of shoes for a wedding. She finds a pair at her favorite outlet shoe store for $58. Kelly's consumer surplus is a. $10 b. $28 c. $58 d. $68

Josh is willing to pay $40 for a haircut, but he is able to pay $25 at the local salon. His consumer surplus is a. $0 because the cost exceeds his maximum willingness to pay b. $15 c. $25 d. $65

Which of the following is not true when the price of a good or service falls? a. Buyers who were already buying the good or service are better off b. Some new buyers, who are now willing to buy, enter the market c. The total consumer surplus in the market increases. d. The total value of purchases before and after the price change is the same

Which area represents the increase in producer surplus when the price rises from P1 to P2? a. BCG b. ACH c. ABGD d. AHGB

Producer surplus is the a. area under the supply curve to the left of the amount sold b. amount a seller is paid minus the cost of production c. are between the supply and demand curve, above the equilibrium price d. cost to sellers of participating in a market

Many economists believe that restrictions against ticket scalping result in each of the following except a. a smaller audience for cultural and sport events b. shorter lines at cultural and sporting events c. less tax revenue for the state d. an increase in ticket prices

The 2005 Boston Globe article discussing ticket scalping points out that the price people will pay for tickets will rise when a. supply and demand are both limited b. supply is limited and demand is not limited c. supply is limited and demand is not limited d. supply and demand are both not limited

If the price decreases in the region of the demand curve between points B and C, we can expect total revenue to a. increase b. stay the same c. decrease d. first increase, then decrease until total revenue is maximized

When her income increased from $10,000 to $20,000, Heather's consumption of macaroni decreased from 10 pounds to 5 pounds and her consumption of soy-burgers increased from 2 pounds to 4 pounds. We can conclude that for Heather, macaroni a. and soy-burgers are both normal goods with income elasticities equal to 1 b. is an inferior good and soy-burgers are normal goods; both have income elasticities of 1 c. is an inferior good with an income elasticity of -1 and soy-burgers are normal good with an income elasticity of 1 d. and soy-burgers are both inferior goods with income elasticities equal to -1

When the price ceiling applies in this market, and the supply curve for gasoline shifts from S1 to S2, a. the market price will increase to P3 b. a surplus will occur at the new market price of P3 c. the market price will stay at P1 d. a shortage will occur at the new market price of P2

Suppose a tax of $5 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed? a. $5 b. between $5 and $10 c. between $10 and $14 d. $14

Suppose a tax of $5 per unit is imposed on this market. Which of the following is correct? a. Buyers and sellers will share the burden of the tax equally b. Buyers will bear more of the burden of the tax than sellers will c. Sellers will bear more of the burden of the tax than buyers will d. Any of the above is possible

The price received by sellers in a market will increase if the government decreases a a. binding price floor in that market b. binding price ceiling in that market c. tax on the good sold in that market d. none of the above is correct

At the equilibrium price, consumer surplus is a. $480 b. $640 c. $1,120 d. $1,280

Total surplus in a market will increase when the government a. imposes a tax on that market b. imposes a binding price floor on that market c. removes a binding price ceiling from that market d. None of the above is correct

Coffee and tea are substitutes. Good weather that sharply increases the coffee bean harvest would a. increase consumer surplus in the market for coffee and decrease producer surplus in the market for tea b. increase consumer surplus in the market for coffee and increase producer surplus in the market for tea c. decrease consumer surplus in the market for coffee and increase producer surplus in the market for tea d. decrease consumer surplus in the market for coffee and decrease producer surplus in the market for tea

Suppose that Firms A and B each produce high-resolution computer monitors, but Firm A can do so at a lower cost. Cassie and David each want to purchase a high-resolution computer monitor, but David is willing to pay more than Cassie. Which of the following market outcomes is efficient? a. Firm A produces a monitor that Cassie buys. David does not purchase a monitor b. Firm A produces a monitor that David buys c. Firm B produces a monitor that Cassie buys. David does not purchase a monitor d. Firm B produces a monitor that David buys