Explain why the shape of the demand curve will determine how a shock to the market equilibrium affects price and quantity. What will be an ideal response? ANSWER A flatter demand curve has a smaller slope in absolute value. That means that consumers are more sensitive to price changes. Therefore, a change in price […]
Date: September 9th, 2020
Consider the following products. Which of them has the flattest demand curve? A) insulin B) alcohol C) cigarettes D) butter ANSWER D
Date: September 9th, 2020
If an increase in income results in a rightward parallel shift of the demand curve, then at any given price, the price elasticity of demand will have A) increased in absolute terms. B) decreased in absolute terms. C) remained unchanged. D) increased, decreased or stayed the same. It cannot be determined. ANSWER B
Date: September 9th, 2020
If the demand for orange juice is expressed as Q = 2000 – 500p, where Q is measured in gallons and p is measured in dollars, then at the price of $3, the demand curve A) is elastic. B) has a unitary elasticity. C) is inelastic. D) is perfectly inelastic. ANSWER A
Date: September 9th, 2020
Suppose the demand function for a good is expressed as Q = 100 – 4p. If the good currently sells for $10, then the price elasticity of demand equals A) -1.5. B) -0.67. C) -4. D) -2.5. ANSWER B
Date: September 9th, 2020
If the demand function for orange juice is expressed as Q = 2000 – 500p, where Q is quantity in gallons and p is price per gallon measured in dollars, then the demand for orange juice has a unitary elasticity when price equals A) $0. B) $1. C) $2. D) $4. ANSWER C
Date: September 9th, 2020
If the price elasticity of demand for a good is less than one in absolute value, economists would characterize consumers of this good A) as not very sensitive to price. B) as not very sensitive to the quantity they demand. C) as very sensitive to price. D) as elastic. ANSWER A
Date: September 9th, 2020
The military is NOT a perfectly competitive market because A) there is only one buyer, i.e., the government, for military goods/services. B) there is imperfect information, i.e., intelligence branches. C) there are heterogeneous goods/services because each military branch provides different goods/services. D) All of the above. ANSWER D
Date: September 9th, 2020
Suppose the market for a good is expressed as follows: Inverse demand: P = 200 – 2Q Inverse supply: P = 2Q What is the equilibrium if the government imposes a supply quota of 75 units? What is the equilibrium if the government imposes a supply quota of 25 units? What will be an ideal […]
Date: September 9th, 2020
What is one reason the supply and demand model might NOT be appropriate to the health-care industry? A) Consumers do not have full information. B) Providers do not know the demand for health-care services. C) Consumers do not know how to value their own health. D) The costs of finding a doctor are too low. […]
Date: September 9th, 2020
