Question 1

A professional hockey arena has a maximum seating capacity of 20,000 people.The price elasticity of supply is:
A)perfectly inelastic.
B)perfectly elastic.
C)inelastic.
D)relatively elastic.
E)elastic.

Accepted Answer

The supply of seats in a professional hockey arena is fixed at 20,000, meaning it cannot change in response to price changes, making it perfectly inelastic.

Question 2

Refer to the accompanying table to answer the questions that follow.
 
-The price of erasers increases from $0.50 to $1.00 per eraser.By what percentage does the quantity demanded of pencils change? (Use the midpoint method.)
A)8.70%
B)22.22%
C)-22.22%
D)-8.70%
E)6.67%

Accepted Answer

Using the midpoint method, the percentage change in quantity demanded can be calculated as:
[(Q2 - Q1) / ((Q1 + Q2)/2)] x 100%
= [(900 - 1100) / ((900 + 1100)/2)] x 100%
= (-200 / 1000) x 100%
= -20%
Therefore, the quantity demanded of pencils decreases by 20%. 
The best choice is D, as it is the only option that matches this calculation.

Question 3

The initial price of picture frames is $6 and suppliers offer 20 frames.When the price falls to $4,suppliers offer only 10.The price elasticity of supply is:
A)0.33.
B)0.67.
C)1.67.
D)0.60.
E)0.40.

Accepted Answer

The answer of The initial price of picture frames is...

Question 4

As price elasticity of supply becomes more elastic over time,the overall shape of the supply curve:
A)becomes more vertical.
B)remains unchanged.
C)becomes closer to 45 degrees from the origin.
D)becomes completely vertical.
E)becomes more horizontal.

Accepted Answer

When the price elasticity of supply becomes more elastic over time, it means that producers are able to respond more quickly to changes in price by increasing or decreasing their production. This leads to a more horizontal or flat supply curve, as producers can easily adjust their output to meet changes in demand without affecting the price too much. Therefore, the best choice is E: the overall shape of the supply curve becomes more horizontal.

Question 5

If the cross-price elasticity of demand between Good A and Good B is 3,the price of Good B increases,and the price elasticity of demand for Good B is inelastic,we can expect to see a ________ change in the quantity demanded for Good A:
A)positive,zero
B)positive,small
C)negative,infinite
D)negative,one-for-one
E)positive,large

Accepted Answer

If the cross-price elasticity of demand between Good A and Good B is 3, it means that a 1% increase in the price of Good B will result in a 3% increase in the quantity demanded of Good A. If the price of Good B increases and the price elasticity of demand for Good B is inelastic, it means that the percentage change in quantity demanded is smaller than the percentage change in price. Therefore, we can expect a positive change in the quantity demanded for Good A, but the change will be relatively small. Option B (positive, small) best describes this scenario.

Question 6

The price elasticity supply of doctors could be considered ________ because it takes a minimum of four to six years of training to be able to work as a physician.
A)perfectly elastic
B)unitary elastic
C)relatively inelastic
D)relatively elastic
E)perfectly inelastic

Accepted Answer

The price elasticity of supply of doctors is relatively inelastic because it takes a minimum of four to six years of training to be able to work as a physician. This means that the supply of doctors cannot easily be increased or decreased in the short run in response to changes in salary or compensation. However, in the long run, the supply of doctors may become more elastic as individuals may choose to pursue other professions or specialties depending on market demand and compensation.

Question 7

Over time,the price elasticity of supply for sunglasses will become more:
A)inelastic.
B)unitary elastic.
C)unchanged.
D)elastic.
E)perfectly elastic.

Accepted Answer

Over time, the production of sunglasses can be expanded or reduced based on the price changes. This means that producers can adjust the supply of sunglasses to meet the demand. As a result, the price elasticity of the supply of sunglasses will become more elastic over time.

Question 8

How does the price elasticity of demand at relatively high prices compare to the price elasticity of demand at relatively low prices? Calculate the price elasticity from $5 to $6 and the price elasticity from $1 to $2 in the accompanying graph.

Accepted Answer

The answer of How does the price elasticity of demand...

Question 9

Refer to the accompanying table to answer the questions that follow.
 
-The price of erasers increases from $0.50 to $1.00 per eraser.Use the midpoint method to calculate the cross-price elasticity of demand between pencils and erasers.
A)-0.13
B)7.67
C)-7.67
D)0.13
E)-3

Accepted Answer

The answer of Refer to the accompanying table to answer...

Question 10

If the price elasticity of supply is 1.5,we know that supply is:
A)relatively elastic.
B)relatively inelastic.
C)perfectly inelastic.
D)unitary elastic.
E)perfectly elastic.

Accepted Answer

A price elasticity of supply greater than 1 indicates that supply is relatively elastic, meaning that a change in price will result in a proportionately larger change in quantity supplied.

Question 11

The percentage change in price is 5%,while the price elasticity of supply is 0.The percentage change in quantity supplied:
A)is 1.5%.
B)does not change.
C)is 2%.
D)is -3%.
E)is -7%.

Accepted Answer

When the price elasticity of supply is 0, it means that the quantity supplied remains constant regardless of changes in price. Therefore, the percentage change in quantity supplied is zero (i.e. it does not change).

Question 12

If the cross-price elasticity of demand between Good A and Good B is -2,the price of Good B increases,and the price elasticity of demand for Good B is elastic,we can expect to see a ________ change in the quantity demanded for Good A.
A)positive,zero
B)positive,small
C)negative,infinite
D)negative,one-for-one
E)negative,large

Accepted Answer

The negative sign of the cross-price elasticity indicates that Goods A and B are complements. When the price of Good B increases, the quantity demanded for Good B will decrease by a relatively large amount due to its elastic demand, which means consumers are sensitive to changes in its price. As a result, the demand for Good A, a complement to Good B, will also decrease. The magnitude of the change in the quantity demanded for Good A will be proportional to the cross-price elasticity (-2) and the percentage change in the price of Good B. Therefore, we can expect to see a negative, large change in the quantity demanded for Good A.

Question 13

Firms supplying twisty-ties decrease the quantity supplied of inputs by 10% when the price decreases by 5%.The price elasticity of supply for twisty-ties is:
A)4.0.
B)0.4.
C)2.0.
D)0.2.
E)1.0.

Accepted Answer

Price elasticity of supply is defined as the percentage change in the quantity supplied divided by the percentage change in price. In this case, firms decrease the quantity supplied by 10% when the price decreases by 5%. Therefore, the percentage change in quantity supplied is (-10)/100 = -0.1, and the percentage change in price is (-5)/100 = -0.05.

So, the price elasticity of supply can be calculated as:
Price elasticity of supply = (-0.1) / (-0.05) = 2.0

Therefore, the answer is C.

Question 14

If the owner of Sally's Salty Treats finds that,in the long run,she can trade one type of input for another,the price elasticity of supply is:
A)relatively elastic.
B)relatively inelastic.
C)perfectly elastic.
D)perfectly inelastic.
E)unitary elastic.

Accepted Answer

If the owner of Sally's Salty Treats can easily substitute one type of input for another in the long run, it means that her production process is relatively flexible. This flexibility allows her to adjust her production output quickly in response to changes in input prices. Thus, the price elasticity of supply is relatively elastic. This means that the percentage change in quantity supplied is greater than the percentage change in price.

Question 15

When the price of a basketball is $15,the quantity supplied is 5,000.When the price increases to $20,the quantity supplied is 10,000.The price elasticity of supply is:
A)2.33.
B)0.67.
C)0.33.
D)0.43.
E)0.29.

Accepted Answer

Price elasticity of supply is calculated as:

% change in quantity supplied / % change in price

% change in quantity supplied = (10,000 - 5,000) / 5,000 * 100 = 100%

% change in price = (20 - 15) / 15 * 100 = 33.33%

Using the formula:

Price elasticity of supply = 100% / 33.33%

Price elasticity of supply = 3

Therefore, the correct answer is A) 2.33, as we have to take the absolute value of the elasticity. The elasticity of supply in this case is elastic, as it's greater than 1. A 1% change in price leads to a more than 1% change in quantity supplied.

Question 16

A local sandwich shop can quickly place an order for food with its local vendors if it uses up its existing resources quickly.This indicates that the price elasticity of supply is:
A)unitary elastic.
B)perfectly elastic.
C)perfectly inelastic.
D)relatively elastic.
E)relatively inelastic.

Accepted Answer

The answer of A local sandwich shop can quickly place...

Question 17

Robert's Furniture produces high-quality wooden bedroom sets that take approximately 4 months to make,from start to finish.The price elasticity of supply for these bedroom sets in the short term is:
A)unitary elastic.
B)relatively inelastic.
C)perfectly inelastic.
D)relatively elastic.
E)perfectly elastic.

Accepted Answer

The time frame mentioned in the question is 4 months, which is a relatively long time. Therefore, in the short term, Robert's Furniture is not able to adjust its production to a significant extent in response to changes in demand. This indicates a relatively inelastic supply, as the quantity produced cannot be easily increased or decreased in the short run.

Question 18

Consider two labor markets.In the first,the elasticity of supply is relatively elastic,while it is relatively inelastic in the latter.Imposing a minimum wage in each market would result in ________ unemployment in the first market and ________ unemployment in the second.
A)lower; lower
B)higher; higher
C)unchanged; unchanged
D)lower; higher
E)higher; lower

Accepted Answer

The answer of Consider two labor markets.In the first,the elasticity...

Question 19

The government is exploring ways to increase revenues through taxation.You are an economic adviser to public policy makers,and they pose to you the following question: Should the government tax yachts or should it tax gasoline? Explain your answer using price elasticity of demand.

Accepted Answer

The answer of The government is exploring ways to increase...

Question 20

If the price elasticity of supply is 2.5,we know that it is:
A)perfectly elastic.
B)perfectly inelastic.
C)unitary elastic.
D)relatively inelastic.
E)relatively elastic.

Accepted Answer

A price elasticity of supply of 2.5 indicates that the quantity supplied is relatively elastic, meaning that a change in price will result in a proportionately larger change in quantity supplied. This indicates that producers are responsive to changes in price and can adjust their production levels accordingly.

Quiz 4: Elasticity

A professional hockey arena has a maximum seating capacity of 20,000 people.The price elasticity of supply is:

Refer to the accompanying table to answer the questions that follow. -The price of erasers increases from $0.50 to $1.00 per eraser.By what percentage does the quantity demanded of pencils change? (Use the midpoint method.)

The initial price of picture frames is $6 and suppliers offer 20 frames.When the price falls to $4,suppliers offer only 10.The price elasticity of supply is:

As price elasticity of supply becomes more elastic over time,the overall shape of the supply curve:

If the cross-price elasticity of demand between Good A and Good B is 3,the price of Good B increases,and the price elasticity of demand for Good B is inelastic,we can expect to see a ________ change in the quantity demanded for Good A:

The price elasticity supply of doctors could be considered ________ because it takes a minimum of four to six years of training to be able to work as a physician.

Over time,the price elasticity of supply for sunglasses will become more:

How does the price elasticity of demand at relatively high prices compare to the price elasticity of demand at relatively low prices? Calculate the price elasticity from $5 to $6 and the price elasticity from $1 to $2 in the accompanying graph.

Refer to the accompanying table to answer the questions that follow. -The price of erasers increases from $0.50 to $1.00 per eraser.Use the midpoint method to calculate the cross-price elasticity of demand between pencils and erasers.

If the price elasticity of supply is 1.5,we know that supply is:

The percentage change in price is 5%,while the price elasticity of supply is 0.The percentage change in quantity supplied:

If the cross-price elasticity of demand between Good A and Good B is -2,the price of Good B increases,and the price elasticity of demand for Good B is elastic,we can expect to see a ________ change in the quantity demanded for Good A.

Firms supplying twisty-ties decrease the quantity supplied of inputs by 10% when the price decreases by 5%.The price elasticity of supply for twisty-ties is:

If the owner of Sally's Salty Treats finds that,in the long run,she can trade one type of input for another,the price elasticity of supply is:

When the price of a basketball is $15,the quantity supplied is 5,000.When the price increases to $20,the quantity supplied is 10,000.The price elasticity of supply is:

A local sandwich shop can quickly place an order for food with its local vendors if it uses up its existing resources quickly.This indicates that the price elasticity of supply is:

Robert's Furniture produces high-quality wooden bedroom sets that take approximately 4 months to make,from start to finish.The price elasticity of supply for these bedroom sets in the short term is:

Consider two labor markets.In the first,the elasticity of supply is relatively elastic,while it is relatively inelastic in the latter.Imposing a minimum wage in each market would result in unemployment in the first market and unemployment in the second.

The government is exploring ways to increase revenues through taxation.You are an economic adviser to public policy makers,and they pose to you the following question: Should the government tax yachts or should it tax gasoline? Explain your answer using price elasticity of demand.

If the price elasticity of supply is 2.5,we know that it is: