Question 1

Which of the following statements is correct?
A)Advocates for drug-interdiction policies that reduce the supply of illegal drugs argue that the demand for illegal drugs may be more responsive in the long run than in the short run.
B)The demand for illegal drugs is price inelastic.
C)Drug interdiction efforts that reduce the supply of illegal drugs may increase drug-related crimes.
D)All of the above are correct.

Accepted Answer

The answer of Which of the following statements is correct?
A)Advocates...

Question 2

If the quantity supplied responds only slightly to changes in price, then
A)supply is said to be elastic.
B)supply is said to be inelastic.
C)an increase in price will not shift the supply curve very much.
D)even a large decrease in demand will change the equilibrium price only slightly.

Accepted Answer

If the quantity supplied responds only slightly to changes in price, the supply is said to be inelastic. This means that even if the price changes, the quantity supplied will not change significantly.

Question 3

The price elasticity of supply measures how responsive
A)sellers are to a change in price.
B)sellers are to a change in buyers' income.
C)buyers are to a change in production costs.
D)equilibrium price is to a change in supply.

Accepted Answer

The price elasticity of supply measures how sensitive sellers are to a change in price. It shows the degree to which the quantity supplied responds to a change in price. If sellers are highly responsive, then the supply will be elastic, and if they are less responsive, then the supply will be inelastic.

Question 4

If the price elasticity of supply for wheat is less than 1, then the supply of wheat is
A)inelastic.
B)elastic.
C)unit elastic.
D)quite sensitive to changes in income.

Accepted Answer

If the price elasticity of supply for wheat is less than 1, it means that the percentage change in quantity supplied is less than the percentage change in price. In other words, a change in price will result in a relatively smaller change in quantity supplied. This indicates that the supply of wheat is relatively inelastic.

Question 5

OPEC has coordinated a reduction in supply that was
A)effective in insulating the members from the decrease in demand in the late 2000s.
B)more profitable in the long run than in the short run.
C)profitable in both the short run and the long run.
D)more profitable in the short run than in the long run.

Accepted Answer

While the reduction in supply through OPEC coordination did initially lead to increased profits in the short run, it was not as profitable in the long run as it encouraged non-OPEC countries to increase their production and take market share. In addition, the decrease in supply contributed to higher oil prices, which incentivized investments in alternative energy sources, further reducing demand for oil in the long run.

Question 6

The production of methamphetamine (meth) is a social problem in the Midwest. Iowa is considering two potential programs: Operation Methbust would increase the number of sheriffs' deputies to search out and destroy methamphetamine labs. Operation Say No to Meth would increase the training required of public school teachers so that they could better educate students about the health risks of using meth. Assuming that each program were successful, which of the following statements is correct?
A)Both Operation Methbust and Say No would reduce the equilibrium quantity and increase the equilibrium price of meth.
B)Both Operation Methbust and Say No would increase the equilibrium quantity and reduce the equilibrium price of meth.
C)Both Operation Methbust and Say No would reduce the equilibrium quantity of meth; Operation Methbust would increase the equilibrium price, whereas Say No would reduce the equilibrium price of meth.
D)Both Operation Methbust and Say No would reduce the equilibrium price of meth; Operation Methbust would reduce the equilibrium quantity, whereas Say No would increase the equilibrium quantity of meth.

Accepted Answer

Both programs would reduce the equilibrium quantity of meth because they are both aimed at reducing demand. Operation Methbust would increase the cost of production, as more resources would be devoted to searching out and destroying meth labs, which would reduce the supply of meth and increase the equilibrium price. Operation Say No to Meth would increase the education level of potential meth users, which would increase the price elasticity of demand for meth, resulting in a reduction in the equilibrium price. Therefore, both programs would have a similar effect on the equilibrium quantity of meth, but they would have opposite effects on the equilibrium price.

Question 7

Which of the following statements about agriculture in the U.S. is not correct?
A)From the 1950s to today, agricultural output has increased about five times.
B)Because technological improvements increase the supply of a product for which demand is inelastic, an individual farmer would be better off not adopting the new technology.
C)Increasing the supply of agricultural products typically benefits consumers but harms farmers.
D)Technological improvements typically increase supply and decrease revenue for farmers.

Accepted Answer

Technological improvements increase the supply of a product and lower its cost, which may lead to a decrease in price and an increase in demand. This may result in either an increase or a decrease in revenue for individual farmers, depending on the elasticity of demand for their product. However, in general, technological improvements have led to an increase in total agricultural output and a decrease in prices, benefiting consumers but potentially harming farmers. Therefore, choice B is not correct.

Question 8

A key determinant of the price elasticity of supply is
A)the ability of sellers to change the price of the good they produce.
B)the ability of sellers to change the amount of the good they produce.
C)how responsive buyers are to changes in sellers' prices.
D)the slope of the demand curve.

Accepted Answer

Price elasticity of supply measures the responsiveness of quantity supplied to a change in price of the good. If sellers are able to easily adjust the amount of the good they produce in response to a change in price, then supply is more elastic. Therefore, the key determinant of price elasticity of supply is the ability of sellers to change the amount of the good they produce.

Question 9

A linear, upward-sloping supply curve has
A)a constant slope and a changing price elasticity of supply.
B)a changing slope and a constant price elasticity of supply.
C)both a constant slope and a constant price elasticity of supply.
D)both a changing slope and a changing price elasticity of supply.

Accepted Answer

A linear, upward-sloping supply curve has a constant slope, but the price elasticity of supply changes as the price changes. This is because at lower prices, producers may not be willing or able to increase their output significantly, but as prices increase, they may be more motivated to produce more, thus making their supply more elastic.

Question 10

Which of the following statements about agriculture in the U.S. is correct?
A)Technological improvements typically increase both supply and revenue for individual farmers.
B)Technological improvements that increased supply, coupled with inelastic demand for foodstuffs, explain why the number of farmers has decreased dramatically over the last century.
C)Because technological improvements increase the supply of a product for which demand is inelastic, an individual farmer would be better off not adopting the new technology.
D)All of the above are correct.

Accepted Answer

The answer of Which of the following statements about agriculture...

Question 11

A key determinant of the price elasticity of supply is the time period under consideration. Which of the following statements best explains this fact?
A)Supply curves are steeper over long periods of time than over short periods of time.
B)Buyers of goods tend to be more responsive to price changes over long periods of time than over short periods of time.
C)The number of firms in a market tends to be more variable over long periods of time than over short periods of time.
D)Firms prefer to change their prices in the short run rather than in the long run.

Accepted Answer

The answer of A key determinant of the price elasticity...

Question 12

The price elasticity of supply measures how much
A)the quantity supplied responds to changes in input prices.
B)the quantity supplied responds to changes in the price of the good.
C)the price of the good responds to changes in supply.
D)sellers respond to changes in technology.

Accepted Answer

The price elasticity of supply measures the responsiveness of quantity supplied to changes in the price of the good. It shows how much the quantity supplied changes in response to a change in price.

Question 13

The price elasticity of supply measures how responsive
A)equilibrium price is to equilibrium quantity.
B)sellers are to a change in buyers' income.
C)sellers are to a change in price.
D)consumers are to the number of substitutes.

Accepted Answer

The price elasticity of supply measures how responsive sellers are to a change in price. It shows the percentage change in quantity supplied in response to a percentage change in price.

Question 14

If marijuana were legalized, it is likely that there would be an increase in the demand for marijuana. If demand for marijuana is inelastic and the supply of marijuana is perfectly elastic, this will result in
A)higher prices and higher total revenue from marijuana sales.
B)higher prices but lower total revenue from marijuana sales.
C)the same price and higher total revenue from marijuana sales.
D)the same price but lower total revenue from marijuana sales.

Accepted Answer

When demand is inelastic and supply is perfectly elastic, an increase in demand leads to a higher quantity sold at the same price, resulting in higher total revenue.

Question 15

Drug-interdiction policies that reduce the supply of illegal drugs may
A)be more effective in the long run than in the short run.
B)be best coupled with drug-education programs designed to reduce demand.
C)increase drug-related crimes.
D)All of the above are correct.

Accepted Answer

The answer of Drug-interdiction policies that reduce the supply of...

Question 16

Drug-interdiction policies that reduce the supply of illegal drugs
A)are likely to be more effective in the short run than in the long run.
B)are proven to reduce illegal drug use faster than drug-education programs designed to reduce demand.
C)may increase drug-related crimes.
D)All of the above are correct.

Accepted Answer

Drug-interdiction policies that focus solely on reducing the supply of illegal drugs may unintentionally increase drug-related crimes. This is because when the supply of drugs is reduced, demand remains constant, leading to higher prices and potentially violence among those involved in the drug trade. Additionally, these policies may not address the root causes of drug use and addiction, and therefore may not be effective in the long run. While drug-education programs may take longer to show results, they focus on reducing demand for drugs through prevention and treatment, and therefore may be a more effective long-term solution.

Question 17

A key determinant of the price elasticity of supply is the
A)time horizon.
B)income of consumers.
C)price elasticity of demand.
D)importance of the good in a consumer's budget.

Accepted Answer

The time horizon is a key determinant of the price elasticity of supply. In the short run, it is harder for producers to adjust their supply levels in response to price changes, making the supply relatively inelastic. In the long run, producers have more time to adjust their production processes and inputs, making supply more elastic. The other options listed are determinants of the price elasticity of demand, not supply.

Question 18

The production of methamphetamine (meth) is a social problem in the Midwest. Iowa is considering two potential programs: Operation Methbust would increase the number of sheriffs' deputies to search out and destroy methamphetamine labs. Operation Say No to Meth would increase the training required of public school teachers so that they could better educate students about the health risks of using meth. Assuming that each program were successful, which of the following statements is correct?
A)Both Operation Methbust and Say No would reduce the demand for meth.
B)Both Operation Methbust and Say No would reduce the supply of meth.
C)Operation Methbust would reduce the demand for meth; Operation Say No would reduce the supply of meth.
D)Operation Methbust would reduce the supply of meth; Operation Say No would reduce the demand for meth.

Accepted Answer

Operation Methbust would directly target the production (supply) side of methamphetamine by destroying labs, therefore reducing the supply of meth. Operation Say No would aim to educate individuals (particularly students) about the risks of using meth, which would decrease the demand for the drug. Therefore, Operation Say No would indirectly reduce the demand for meth.

Question 19

A key determinant of the price elasticity of supply is the
A)number of close substitutes for the good in question.
B)extent to which buyers alter their quantities demanded in response to changes in prices.
C)length of the time period.
D)extent to which buyers alter their quantities demanded in response to changes in their incomes.

Accepted Answer

The length of the time period is a key determinant of the price elasticity of supply. In the short run, it is often difficult for suppliers to increase or decrease production in response to changes in prices, resulting in a less elastic supply curve. In the long run, however, suppliers have more time to adjust their production levels and investments, making the supply curve more elastic.

Question 20

Which of the following statements about agriculture in the U.S. is correct?
A)From the 1950s to today, agricultural output has approximately doubled.
B)Because technological improvements increase the supply of a product for which demand is inelastic, an individual farmer would be better off not adopting the new technology.
C)Increasing the supply of agricultural products typically benefits consumers but harms farmers.
D)Technological improvements typically increase both supply and revenue for individual farmers.

Accepted Answer

The answer of Which of the following statements about agriculture...

Quiz 5: Elasticity and Its Application

Which of the following statements is correct?

If the quantity supplied responds only slightly to changes in price, then

The price elasticity of supply measures how responsive

If the price elasticity of supply for wheat is less than 1, then the supply of wheat is

OPEC has coordinated a reduction in supply that was

Which of the following statements about agriculture in the U.S. is not correct?

A key determinant of the price elasticity of supply is

A linear, upward-sloping supply curve has

Which of the following statements about agriculture in the U.S. is correct?

A key determinant of the price elasticity of supply is the time period under consideration. Which of the following statements best explains this fact?

The price elasticity of supply measures how much

The price elasticity of supply measures how responsive

If marijuana were legalized, it is likely that there would be an increase in the demand for marijuana. If demand for marijuana is inelastic and the supply of marijuana is perfectly elastic, this will result in

Drug-interdiction policies that reduce the supply of illegal drugs may

Drug-interdiction policies that reduce the supply of illegal drugs

A key determinant of the price elasticity of supply is the

A key determinant of the price elasticity of supply is the

Which of the following statements about agriculture in the U.S. is correct?