In the elastic portion of the supply, small changes in prices lead to ________ changes in quantity, while in the inelastic portion of the supply curve, small changes in prices lead to ________ changes in quantity. A) small; small B) large; large C) small; large D) large; small ANSWER D
Date: September 9th, 2020
Why is the supply of oil more price elastic in the long run? A) New deposits are found. B) Better extraction technology is developed. C) Firms have the ability to change the amount of all inputs. D) All of the above. ANSWER D
Date: September 9th, 2020
The price elasticity of demand for gasoline is estimated to be -0.2. Two million gallons are sold daily at a price of $3. Use this information to calculate a demand curve for gasoline assuming it is linear. What will be an ideal response? ANSWER Elasticity = slope (p/Q), -0.2 = slope (3/2). The slope […]
Date: September 9th, 2020
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 […]
Date: September 9th, 2020
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
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
