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
Date: September 9th, 2020
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 […]
Date: September 9th, 2020
Because demand curves slope downward according to the Law of Demand, the price elasticity of demand is a negative number. Indicate whether the statement is true or false ANSWER True . The price elasticity of demand measures the change in quantity demanded when a price change occurs. If price increases, the change in the […]
Date: September 9th, 2020
Which good would you expect to have a greater price elasticity: a gallon of gasoline sold at a specific gasoline station on Main Street in Phoenix, a gallon of gasoline sold in Phoenix, or a gallon of gasoline sold in Arizona? Why? What will be an ideal response? ANSWER A gallon of gasoline sold […]
Date: September 9th, 2020
Explain why when the demand curve for a good is elastic, a one percent reduction in the price of the good will increase a consumer’s expenditure on the good. What will be an ideal response? ANSWER When a good has an elastic demand, a one percent decrease in the price will result in a […]
Date: September 9th, 2020
The supply of movie tickets at one theater’s box office for this Saturday’s 4:30 show of a new movie is A) perfectly elastic until all seats are filled. B) unit elastic. C) perfectly inelastic. D) elastic. ANSWER C
Date: September 9th, 2020
The market demand for wheat is Q = 100 – 2p + 1pb, where pb is the price of barley. If the price of wheat is $2 and the price of barley is $4, the cross-price elasticity of demand A) equals (4/100). B) equals (-2/100). C) equals (-4/25). D) cannot be calculated without more information. […]
Date: September 9th, 2020
If the supply curve for orange juice is estimated to be Q = 40 + 2p, then A) supply is price elastic at all prices. B) supply is price inelastic at all prices. C) supply is elastic only at prices below 20. D) No general statements about price elasticity of supply can be made. […]
Date: September 9th, 2020
Assume the market demand for wheat may be written as Q = 45 – 2p + 0.3Y + 1pb where Y refers to income and pb refers to the price of barley. Assuming that wheat and barley both sell for $1, and income is $20, calculate the price elasticity, cross price elasticity and income elasticity […]
Date: September 9th, 2020
When comparing elasticities between two different linear demand curves, the curve that is flatter has greater price elasticity at every given price. Indicate whether the statement is true or false ANSWER False. This statement confuses slope with elasticity. Elasticity is calculated by multiplying the slope times (p/Q). As a result, the vertical intercept (along […]
Date: September 9th, 2020
