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 […]
An agricultural corn market faces a positive supply shock due to a beneficial rainy season and the use of new genetically modified seeds. As a result, farmers face the largest crop harvest in decades. Which answer below explains how a farm could actually go bankrupt under this scenario. A) The elasticity of supply for corn […]
The percentage change in the quantity supplied in response to a percentage change in the price is known as the A) slope of the supply curve. B) excess supply. C) price elasticity of supply. D) All of the above. ANSWER C
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 […]
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 […]
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 […]
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
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. […]
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. […]