The elasticity of supply of rental units in New York City is estimated to be about 0.10. Current price restrictions (price floors) are estimated to decrease the price of rental units by 10% below equilibrium price. By how much would price and quantity supplied change if the price floors were removed from the rental unit […]
For all goods, the long run demand curve is always more elastic than the short run demand curve. Indicate whether the statement is true or false ANSWER False. Goods that can be easily stored may have a more elastic short run demand curve than long run.
Relative to the short-run demand for gasoline, the long-run demand for gasoline is A) probably more elastic since people need time to change automobiles and driving habits. B) probably less elastic since people need time to change automobiles and driving habits. C) probably more elastic because people can hoard this good. D) probably less elastic […]
Some environmental groups are on record suggesting that the price of gasoline should be much higher than it was in the early 1990s. Why might they say this? A) They own stock in oil companies. B) They anticipate that the longer the price is high, the more elastic the response by consumers will be. C) […]
Electricity accounts for almost 20% of the cost of making steel. A 10% increase in electricity prices results in steel firms decreasing production and thereby demanding 5% less electricity. Over many years, technological innovations can change the way steel firms make steel and reduce the industry’s energy requirements. This suggests that the steel industry’s short-run […]
If a linear supply curve has a zero intercept, the elasticity of supply is always unitary. Indicate whether the statement is true or false ANSWER True . A linear supply curve from the origin takes the form Q = ap. Elasticity equals a ∗ p/Q. Substituting for Q yields a ∗ p/ap. Numerator and […]
As the demand for corn increases to provide input for ethanol production, what is expected to happen to the price elasticity of corn supply? A) It will decrease. B) It will become zero. C) It will increase. D) It will not change. ANSWER A
The rising price of oil has made it feasible to extract oil out of oily sand in Canada. Concerning the oil market this is an example of A) a higher price elasticity of supply in the long run. B) a higher price elasticity of supply in the short run. C) a higher price elasticity of […]
The short-run elasticity of supply is less than the long-run elasticity of supply A) because consumers’ tastes and preferences change in the long run but not in the short run. B) because producers can adjust the amount of machinery in the long run but not in the short run. C) only for durable goods. D) […]
As more people quit smoking in the United States, what is expected to happen to the price elasticity of supply of cigarettes? A) It will decrease. B) It will increase. C) It can increase or decrease. D) It will not change. ANSWER A
