Microeconomics chp5

In general, elasticity is a measure of O A the extent to which advances in technology are adopted by producers. O B the extent to which a market is competitive. O C how fast the price of a good responds to a shift of the supply curve or demand curve. O D how much buyers and sellers respond to changes in market conditions. The price elasticity of demand measures O A buyers' responsiveness to a change in the price of a good. O B the extent to which demand increases as additional buyers enter the market. O C how much more of a good consumers will demand when incomes rise. O D the movement along a supply curve when there is a change in demand. If demand is inelastic, then O A buyers do not respond much to a change in price. O B buyers respond substantially to a change in price, but the response is very slow. O C buyers do not alter their quantities demanded much in response to advertising, fads, or general changes in tastes. O D the demand curve is very flat.4 For a good that is a necessity, O A quantity demanded tends to respond substantially to a change in price. O B demand tends to be inelastic. O C the law of demand often does not apply. D All of the above are correct. Holding all other forces constant, when the price of gasoline rises, the number of gallons of gasoline demanded would fall substantially over a ten-year period because O A buyers tend to be much less sensitive to a change in price when given more time to react. O B buyers tend to be much more sensitive to a change in price when given more time to react. O C buyers will have substantially more income over a ten-year period. O D the quantity supplied of gasoline increases very little in response to an increase in the price of gasoline. In the long run, the quantity supplied of most goods O A will increase in almost all cases, regardless of what happens to price. O B cannot respond at all to a change in price. O C can respond to a change in price, but the change is almost always inconsequential. O D can respond substantially to a change in price.7 0 If the price elasticity of supply for wheat is less than 1, then the supply of wheat is O A inelastic. B elastic. C unit elastic. O D quite sensitive to change in price. 8 Because the demand for wheat tends to be inelastic, the development of a new, more productive hybrid wheat would tend to O A increase the total revenue of wheat farmers. O B decrease the total revenue of wheat farmers. O C decrease the demand for wheat. O D decrease the supply of wheat. 9 If corn farmers know that the demand for corn is inelastic, and they want to increase their total revenue, they should all O A plant more com so that they would be able to sell more each year. O B increase spending on fertilizer in an attempt to produce more corn on the acres they farm. O C reduce the number of acres they plant in com. O D contribute to a fund that promotes technological advances in corn production.10 418) Which of the following statements is not correct concerning government attempts to reduce the flow of illegal drugs into the country? O A Drug interdiction raises prices and total revenue in the drug market. O B Drug interdiction can increase drug-related crime. O C Drug interdiction shifts the demand curve for drugs to the left. O D Drug interdiction shifts the supply curve of drugs to the left