Question 1

Use the following figure to answer the question :

-If the price elasticity of supply for a good increases over time
A)quantity supplied becomes more sensitive to price.
B)quantity demanded is not sensitive to price.
C)quantity supplied becomes less sensitive to price.
D)quantity demanded is very sensitive to price.

Accepted Answer

When the price elasticity of supply for a good increases over time, it means that producers are able to respond more effectively to changes in price by adjusting their level of production. This increased responsiveness means that quantity supplied becomes more sensitive to price.

Question 2

Use the following figure to answer the question : 
-A perfectly inelastic supply curve is
A)horizontal.
B)vertical.
C)positively sloped.
D)negatively sloped.

Accepted Answer

A perfectly inelastic supply curve means that the quantity supplied remains constant regardless of changes in price. This can only be represented by a vertical supply curve, where the price can change but the quantity supplied remains the same.

Question 3

If demand is __________ and price is _________, total revenue will ________.
A)inelastic; raised; increase
B)inelastic; lowered; decrease
C)elastic; raised; decrease
D)elastic; lowered; increase
E)All of these options are true.

Accepted Answer

The answer of If demand is __________ and price is...

Question 4

Use the following figure to answer the question : 
-The curve in the above graph:
A)can only be a perfectly inelastic demand curve.
B)can only be a perfectly inelastic supply curve.
C)may be either a perfectly inelastic demand curve or a perfectly inelastic supply curve.
D)can be neither a perfectly inelastic demand curve nor a perfectly inelastic supply curve.

Accepted Answer

The curve in the graph can be either a perfectly inelastic demand curve or a perfectly inelastic supply curve. This is because it is a vertical line, which indicates there is no change in quantity demanded or supplied in response to a change in price. In other words, the demand or supply is completely unresponsive to price changes, which is the defining characteristic of a perfectly inelastic curve. It could represent either demand or supply depending on the context of the situation.

Question 5

Use the following figure to answer the question : 
-A 4% decline in the price of laser printers causes the quantity demanded to rise by 8%. The demand for laser printers is
A)perfectly elastic.
B)elastic.
C)unit elastic.
D)inelastic.
E)perfectly inelastic.

Accepted Answer

The fact that a 4% decline in price causes an 8% increase in quantity demanded indicates that the demand for laser printers is elastic. This means that consumers are responsive to changes in price and will buy more when the price goes down. If the demand were unit elastic, a 4% decline in price would result in a 4% increase in quantity demanded, and if the demand were inelastic, a 4% decline in price would result in a smaller increase in quantity demanded (less than 4%). Therefore, choice B is the best answer.

Question 6

Use the following figure to answer the question : 
-Suppose a tax were imposed on motel rooms in the San Antonio area. If demand were slightly elastic and supply were very inelastic, the tax would be borne
A)entirely by motel owners
B)mainly by motel owners
C)mainly by motel renters
D)entirely by motel renters

Accepted Answer

When demand is slightly elastic and supply is very inelastic, the burden of the tax falls mainly on the suppliers (motel owners in this case) because the suppliers are less able to pass the tax onto consumers due to their inelastic supply curve.

Question 7

Use the following Figure to answer the question : 
-How much revenue will the government raise each week from the tax?
A)$8 million
B)$10 million
C)$20 million
D)$40 million
E)$80 million

Accepted Answer

The answer of Use the following Figure to answer the...

Question 8

Statement I: A perfectly elastic demand curve has the same elasticity as a perfectly inelastic demand curve. Statement II: When elasticity is .2, a 1% decline in price will raise quantity demanded by .2%.
A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Accepted Answer

Statement I is false because a perfectly elastic demand curve has an elasticity of infinity, while a perfectly inelastic demand curve has an elasticity of zero. 
Statement II is true because elasticity is the percentage change in quantity demanded divided by the percentage change in price. Therefore, if elasticity is .2, then a 1% decline in price would raise quantity demanded by .2% (0.2/1 = 0.2).

Question 9

Advertisers try to
A)raise the demand for their product and make it more elastic.
B)raise the demand for their product and make it less elastic.
C)lower the demand for their product and make it more elastic.
D)lower the demand for their product and make it less elastic.

Accepted Answer

Advertisers aim to create brand awareness and promote their product, which ultimately leads to an increase in demand. Their objective is to differentiate their product from competitors and show its unique value proposition so that consumers are willing to pay a premium price for it. By creating brand loyalty and a perception of high quality, they can make demand less elastic, meaning that consumers are less likely to switch to a substitute product if the price increases.

Question 10

Use the following figure to answer the question :

-The basic effect of a tax on a service is to _____ that service.
A)decrease the supply of
B)increase the supply of
C)decrease the demand for
D)increase the demand for

Accepted Answer

The answer of Use the following figure to answer the...

Question 11

If demand is __________ and price is _________, total revenue will ________.
A)inelastic; raised; increase
B)elastic; raised; increase
C)inelastic; lowered; increase
D)elastic; lowered; decrease

Accepted Answer

When demand is inelastic (meaning changes in price have little effect on demand), and price is raised, total revenue will increase. This is because the increase in revenue from selling at the higher price outweighs the decrease in revenue from the lower quantity of goods sold.

Question 12

Use the following figure to answer the question : 
-Over time, the supply of a particular good or service tends to
A)become more elastic.
B)become less elastic.
C)stay about the same.

Accepted Answer

Over time, the supply of a particular good or service tends to become more elastic because producers have more time to adjust their production processes, resources, and capacities in response to changes in market demand.

Question 13

Use the following figure to answer the question : 
-When demand is perfectly inelastic the buyer pays _____ of a tax.
A)all
B)most
C)half
D)less than half
E)none

Accepted Answer

When demand is perfectly inelastic, the quantity demanded remains constant regardless of the price. Therefore, the burden of the tax falls entirely on the buyer as they are willing to pay any price for the product. Hence, the buyer pays all of the tax.

Question 14

Use the following figure to answer the question : 
-Statement I: A perfectly inelastic demand curve and a perfectly elastic supply curve are represented the same way on a graph. Statement II: A perfectly elastic demand curve and a perfectly elastic supply curve are represented the same way on a graph.
A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Accepted Answer

Statement I is false because a perfectly inelastic demand curve is represented by a vertical line, while a perfectly elastic supply curve is represented by a horizontal line. Statement II is true because both perfectly elastic demand and supply curves are represented by horizontal lines, indicating that any quantity is demanded or supplied at a specific price.

Question 15

Use the following figure to answer the question : 
-In the graph above
A)D1 is more inelastic than D2.
B)D2 is more inelastic than D1.
C)D1 and D2 have the same elasticity.
D)There is no way to tell whether D1 or D2 is more elastic.

Accepted Answer

The answer of Use the following figure to answer the...

Question 16

Use the following Figure to answer the question : 
-How much is the tax?
A)10 cents
B)20 cents
C)30 cents
D)40 cents
E)50 cents

Accepted Answer

The answer of Use the following Figure to answer the...

Question 17

Use the following figure to answer the question :

-In general taxes on goods and services
A)are borne mainly by consumers.
B)are borne mainly by sellers.
C)are borne equally by consumers and sellers.
D)may be paid mainly or entirely by buyers or it may be paid mainly or entirely by sellers, or may be paid equally by buyers and sellers.

Accepted Answer

Taxes on goods and services may be paid mainly or entirely by buyers or may be paid mainly or entirely by sellers, or may be paid equally by buyers and sellers. Therefore, option D is the correct answer.

Question 18

Use the following figure to answer the question :

-A shift in the above graph from S1 to S2 may represent
A)a tax increase.
B)a tax decrease.
C)the imposition of a price ceiling.
D)the imposition of a price floor.

Accepted Answer

The answer of Use the following figure to answer the...

Question 19

Use the following figure to answer the question : 
-If the supply of steel is perfectly elastic, then an increase in the demand for steel will
A)increase the price of steel but have no effect on quantity supplied.
B)increase the quantity of steel supplies but have no effect on the price.
C)have no effect on the price or the quantity supplied.
D)decrease total revenue taken in by steel producers.

Accepted Answer

If the supply of steel is perfectly elastic, it means that the suppliers can produce any amount of steel at the same price. Therefore, an increase in demand will lead to an increase in the quantity of steel supplied but not affect the price. This is because the suppliers can easily adjust their production to meet the increased demand without any increase in their costs of production. Therefore, (B) is the correct choice.

Question 20

An elasticity that would be considered only slightly inelastic would be
A)0.1.
B)0.9.
C)1.0.
D)1.1.

Accepted Answer

An elasticity of 0.9 indicates a slight degree of inelasticity, meaning that a change in price would lead to a proportionally smaller change in demand. If the elasticity were closer to 1, it would be considered unitary elastic, meaning that a change in price would result in an equal change in demand.

Quiz 6: The Price Elasticities of Demand and Supply

Use the following figure to answer the question : -If the price elasticity of supply for a good increases over time

Use the following figure to answer the question : -A perfectly inelastic supply curve is

If demand is ______ and price is _, total revenue will ____.

Use the following figure to answer the question : -The curve in the above graph:

Use the following figure to answer the question : -A 4% decline in the price of laser printers causes the quantity demanded to rise by 8%. The demand for laser printers is

Use the following figure to answer the question : -Suppose a tax were imposed on motel rooms in the San Antonio area. If demand were slightly elastic and supply were very inelastic, the tax would be borne

Use the following Figure to answer the question : -How much revenue will the government raise each week from the tax?

Statement I: A perfectly elastic demand curve has the same elasticity as a perfectly inelastic demand curve. Statement II: When elasticity is .2, a 1% decline in price will raise quantity demanded by .2%.

Advertisers try to

Use the following figure to answer the question : -The basic effect of a tax on a service is to _____ that service.

If demand is ______ and price is _, total revenue will ____.

Use the following figure to answer the question : -Over time, the supply of a particular good or service tends to

Use the following figure to answer the question : -When demand is perfectly inelastic the buyer pays _____ of a tax.

Use the following figure to answer the question : -In the graph above

Use the following Figure to answer the question : -How much is the tax?

Use the following figure to answer the question : -In general taxes on goods and services

Use the following figure to answer the question : -A shift in the above graph from S1 to S2 may represent

Use the following figure to answer the question : -If the supply of steel is perfectly elastic, then an increase in the demand for steel will

An elasticity that would be considered only slightly inelastic would be