Question 1

If the price elasticity of supply is 2 and the quantity supplied decreases by 6%,then the price must have decreased by 3%.

Accepted Answer

The answer of If the price elasticity of supply is...

Question 2

A government program that reduces land under cultivation hurts farmers but helps consumers.

Accepted Answer

Reducing land under cultivation typically decreases the supply of agricultural products, which can lead to higher prices for consumers. Farmers might benefit from higher prices for their products, but consumers face increased costs.

Question 3

Supply and demand both tend to be more elastic in the long run and more inelastic in the short run.

Accepted Answer

In the long run, consumers have more time to adjust their behavior and find substitutes, leading to a more elastic response to price changes. Similarly, in the long run, firms can adjust their production levels and inputs, leading to a more elastic supply response. In the short run, consumers and firms have fewer options, making demand and supply more inelastic.

Question 4

A "Just Say No" drug education policy that successfully educates consumers to reduce their demand for drugs will lower drug prices and reduce the quantity of drugs demanded.

Accepted Answer

The answer of A "Just Say No" drug education policy...

Question 5

If a supply curve is horizontal,then supply is said to be perfectly elastic,and the price elasticity of supply approaches infinity.

Accepted Answer

A horizontal supply curve means that even a small change in price will cause an infinite change in quantity supplied, which indicates perfect elasticity. Therefore, the price elasticity of supply approaches infinity.

Question 6

A government program that pays farmers not to plant corn on part of their land can help farmers not only through the subsidy payments to farmers who participate in the program but also by raising the market price of corn.

Accepted Answer

By reducing the supply of corn available in the market, the government program can lead to an increase in the market price of corn, benefiting farmers who do choose to plant corn on their land. Additionally, the subsidy payments offer financial support to farmers who choose to participate in the program and may help them stabilize their income.

Question 7

The OPEC oil cartel has difficulty maintaining high prices in the long run because the supply of oil is more inelastic in the long run than in the short run.

Accepted Answer

In the long run, the supply of oil becomes more elastic as producers have more time to adjust to price changes, making it harder for OPEC to maintain high prices.

Question 8

A discovery that increases wheat yields per acre helps farmers by increasing both supply and total revenues.

Accepted Answer

The answer of A discovery that increases wheat yields per...

Question 9

If we observe that when the price of ice cream rises by 10%,ice cream manufacturers increase the quantity supplied of ice cream by 20%,then the price elasticity of supply is 2.

Accepted Answer

The price elasticity of supply is calculated as the percentage change in quantity supplied divided by the percentage change in price. In this case, the percentage change in quantity supplied (20%) is twice the percentage change in price (10%), so the price elasticity of supply is 2.

Question 10

If a t-shirt manufacturer supplies 1,000 t-shirts per week when the price of t-shirts is $10 and supplies 1,200 t-shirts per week when the price of t-shirts is $12,the price elasticity of supply is 2.

Accepted Answer

The price elasticity of supply is calculated as the percentage change in quantity supplied divided by the percentage change in price. In this case, the quantity supplied increases from 1,000 to 1,200 (a 20% increase) when the price increases from $10 to $12 (a 20% increase), resulting in a price elasticity of supply of 1 (20%/20%).

Question 11

Drug interdiction,which reduces the supply of drugs,may decrease drug-related crime because the demand for drugs is inelastic.

Accepted Answer

Drug interdiction may temporarily disrupt the drug supply and increase prices, but it does not necessarily decrease demand for drugs. Inelastic demand means that changes in price have little effect on the quantity of drugs demanded. Therefore, even if drug interdiction raises drug prices, addicts may still commit crimes to obtain the drugs they need. Additionally, drug interdiction can lead to the formation of more violent and powerful drug cartels, which can contribute to an increase in drug-related crime.

Question 12

The cross-price elasticity of garlic salt and onion salt is -2,which indicates that garlic salt and onion salt are substitutes.

Accepted Answer

A negative cross-price elasticity indicates that the goods are complements, not substitutes.

Question 13

OPEC failed to maintain a high price of oil in the long run,partly because both the supply of oil and the demand for oil are more elastic in the long run than in the short run.

Accepted Answer

In the long run, oil producers can increase supply and non-oil energy sources can become more viable, reducing the relative importance of oil. Additionally, consumers can adjust their consumption patterns and adapt to higher prices by driving less or buying more fuel-efficient cars, reducing demand. Thus, both supply and demand for oil are more elastic in the long run, making it difficult for OPEC to maintain high prices.

Question 14

Supply is said to be inelastic if the quantity supplied responds substantially to changes in the price and elastic if the quantity supplied responds only slightly to price.

Accepted Answer

The statement is actually reversed. Supply is said to be inelastic if the quantity supplied responds only slightly to changes in price and elastic if the quantity supplied responds substantially to price.

Question 15

The cross-price elasticity of demand for bacon and eggs likely would be negative because bacon and eggs are complements for many people.

Accepted Answer

Bacon and eggs are often consumed together as a breakfast meal, and when the price of one goes up, demand for the other may decrease as well. Therefore, the cross-price elasticity of demand is likely negative, indicating that the two goods are complements.

Question 16

Supply tends to be more elastic in the short run and more inelastic in the long run.

Accepted Answer

Supply tends to be more inelastic in the short run because producers need time to adjust their production levels, whereas in the long run, they can adjust their production capacity, making supply more elastic.

Question 17

Price elasticity of supply measures how much the quantity supplied responds to changes in the price.

Accepted Answer

Price elasticity of supply measures the responsiveness of the quantity supplied to changes in the price.

Question 18

When the price of knee braces increased by 25 percent,the Brace Yourself Company increased its quantity supplied of knee braces per week by 75 percent.BYC's price elasticity of supply of knee braces is 0.33.

Accepted Answer

The price elasticity of supply is calculated as the percentage change in quantity supplied divided by the percentage change in price. In this case, it would be 75% / 25% = 3.

Question 19

A discovery that increases wheat yields per acre hurts farmers by increasing supply and lowering their total revenues.

Accepted Answer

The answer of A discovery that increases wheat yields per...

Question 20

Drug interdiction,which reduces the supply of drugs,will likely be a less effective policy than educating consumers to reduce their demand for drugs because the drug interdiction policy will lower drug prices and reduce the quantity of drugs demanded.

Accepted Answer

Drug interdiction, aimed at reducing the supply of drugs, typically increases drug prices due to the reduced availability, making them less accessible to consumers, which can reduce the quantity demanded. However, the effectiveness of education in reducing demand can vary and is not directly related to the effects of interdiction on prices.

Quiz 5: Elasticity and Its Application

If the price elasticity of supply is 2 and the quantity supplied decreases by 6%,then the price must have decreased by 3%.

A government program that reduces land under cultivation hurts farmers but helps consumers.

Supply and demand both tend to be more elastic in the long run and more inelastic in the short run.

A "Just Say No" drug education policy that successfully educates consumers to reduce their demand for drugs will lower drug prices and reduce the quantity of drugs demanded.

If a supply curve is horizontal,then supply is said to be perfectly elastic,and the price elasticity of supply approaches infinity.

A government program that pays farmers not to plant corn on part of their land can help farmers not only through the subsidy payments to farmers who participate in the program but also by raising the market price of corn.

The OPEC oil cartel has difficulty maintaining high prices in the long run because the supply of oil is more inelastic in the long run than in the short run.

A discovery that increases wheat yields per acre helps farmers by increasing both supply and total revenues.

If we observe that when the price of ice cream rises by 10%,ice cream manufacturers increase the quantity supplied of ice cream by 20%,then the price elasticity of supply is 2.

If a t-shirt manufacturer supplies 1,000 t-shirts per week when the price of t-shirts is $10 and supplies 1,200 t-shirts per week when the price of t-shirts is $12,the price elasticity of supply is 2.

Drug interdiction,which reduces the supply of drugs,may decrease drug-related crime because the demand for drugs is inelastic.

The cross-price elasticity of garlic salt and onion salt is -2,which indicates that garlic salt and onion salt are substitutes.

OPEC failed to maintain a high price of oil in the long run,partly because both the supply of oil and the demand for oil are more elastic in the long run than in the short run.

Supply is said to be inelastic if the quantity supplied responds substantially to changes in the price and elastic if the quantity supplied responds only slightly to price.

The cross-price elasticity of demand for bacon and eggs likely would be negative because bacon and eggs are complements for many people.

Supply tends to be more elastic in the short run and more inelastic in the long run.

Price elasticity of supply measures how much the quantity supplied responds to changes in the price.

When the price of knee braces increased by 25 percent,the Brace Yourself Company increased its quantity supplied of knee braces per week by 75 percent.BYC's price elasticity of supply of knee braces is 0.33.

A discovery that increases wheat yields per acre hurts farmers by increasing supply and lowering their total revenues.

Drug interdiction,which reduces the supply of drugs,will likely be a less effective policy than educating consumers to reduce their demand for drugs because the drug interdiction policy will lower drug prices and reduce the quantity of drugs demanded.