Deck 5: 0: Sec 50 Mc Elasticity and Its Applications

Question 1

When studying how some event or policy affects a market,elasticity provides information on the

A)change in the costs of production.
B)tradeoff between equality and efficiency.
C)effect on the budget deficit or surplus.
D)direction and magnitude of the effect.

Answer 1

D

Question 2

Which of the following statements about the consumers' responses to rising gasoline prices is correct?

A)Because gasoline is a necessity,consumers do not decrease their quantity demanded in either the short run or the long run.
B)Consumers react to a 10% increase in price with about a 10% decrease in quantity demanded in both the short run and long run.
C)Consumers decrease their quantity demanded more in the short run than in the long run.
D)Consumers decrease their quantity demanded more in the long run than in the short run.

Answer 2

D

Question 3

When studying how some event or policy affects a market,elasticity provides information on the

A)equity effects on the market by identifying the winners and losers.
B)magnitude of the effect on the market.
C)speed of adjustment of the market in response to the event or policy.
D)number of market participants who are directly affected by the event or policy.

Answer 3

C

Question 4

In general,elasticity is a measure of

A)the extent to which advances in technology are adopted by producers.
B)the extent to which a market is competitive.
C)how firms' profits respond to changes in market prices.
D)how much buyers and sellers respond to changes in market conditions.

Question 5

Elasticity is

A)a measure of how much buyers and sellers respond to changes in market conditions.
B)the study of how the allocation of resources affects economic well-being.
C)the maximum amount that a buyer will pay for a good.
D)the value of everything a seller must give up to produce a good.

Question 6

Which of the following statements about the consumers' responses to rising gasoline prices is correct?

A)About 10 percent of the long-run reduction in quantity demanded arises because people drive less and about 90 percent arises because they switch to more fuel-efficient cars.
B)About 90 percent of the long-run reduction in quantity demanded arises because people drive less and about 10 percent arises because they switch to more fuel-efficient cars.
C)About half of the long-run reduction in quantity demanded arises because people drive less and about half arises because they switch to more fuel-efficient cars.
D)Because gasoline is a necessity,consumers do not decrease their quantity demanded in either the short run or the long run.