Question 1 1.5 pts If the demand for widgets is elastic, with respect to price, a widget seller can increase his revenue by raising the price of widgets. O True O False Question 2 4 pts Suppose the price of zercs fell from $8.00 to $7.55, causing the quantity of zercs demanded to rise from 2,100 to 2,280 units. Use the midpoints formula to compute the price elasticity of demand. Enter the number with one decimal place and ignore minus sign: Question 3 2.5 pts In the above question, the total revenue from the sale of zercs: O went up as a result of the price decrease O went down as a result of the price decrease. O stayed the same, despite the price decrease O cannot be determined from the information given.Question 4 4 p Demand for sandwiches at Joe's Deli in Ocean City P P D D Q Q DSR DLR Consider the two demand curves pictured above. Which is the more elastic demand curve for sandwiches? (enter your answer as DSR or DLR) In this picture, DSR stands for demand in the short run and DLR stands for demand in the long run.Question 5 20 pts In each of the following cases, indicate the item with the more inelastic (i.e., less elastic) demand: (each of these answers is worth 2 points) Enter the number 1 or 2, as instructed. Any other entry will be marked as incorrect by the grading algorithm, so be careful. You may wish to refer to the lecture notes entitled Determinants of Price Elasticity of Demand in the LECUTURE NOTES section. 1) The demand for gasoline (enter 1) vs. the demand for champagne (enter 2). 2) The demand for rides on the subway for one week (enter ]) vs. the demand for rides on the subway over a period of one year (enter 2). 3) A required economics textbook at the college bookstore (enter ]) vs. the demand for pulp fiction books at the newsstand (enter 2). 4) The demand for Morton's salt vs. the demand for salt (enter 2) (enter 1) 5) The demand for a house (enter 1) vs. the demand for a piece of chewing gum (enter 2). Question 6 4 pts On which items would the government be more inclined to place a tax - those with an elastic demand or those with an inelastic demand? (Careful on the spelling)Question 7 4 pts For this question, write in the word elastic or inelastic. Watch your spelling! The section of a linear demand curve that is lower than the point of unitary elasticity would represent a relatively relationship between the price and quantity of that good demanded. Question 8 2.5 pts If the cross price elasticity of demand between widgets and zercs is a significantly positive number, that suggests that widgets and zercs are: O substitutes O complements O unrelated O the answer cannot be determined from the information given. Question 9 1.5 pts Suppose that consumers are suddenly willing to pay a higher price for widgets. If widget producers are unable to respond by increasing quantity supplied by any significant degree, it suggests that the supply of widgets is relatively inelastic in the short run. O True O FalseQuestion 10 4 pts Which of the following would have a more elastic supply curve? A) genuine antiques, such as a sofa that George Washington actually slept on, or B) faux (fake) antiques, one that looks like it might be from the colonial era, but can be reproduced by the thousands in a modern Jrniture factory. (enterA or B) Question 11 4 pts Fill in the blank with the correct word: In 1990. Congress passed a "luxury tax" on yachts costing over $100,000. reasoning that only the rich could afford such a luxury and therefore this tax would only "hit the rich." Shortly thereafter. however. sales by boat builders dropped 77% resulting in massive layoffs of workers. The losses in business taxes and income taxes were greater than the "revenue enhancement" of this luxury tax. Yacht buyers, rather than buying new boats upon which the tax was placed. bought boats from foreigi countries and used boats. The problem that Congress failed to foresee was that the demand for boats was much more (elastic/inelastic) than they had realized. Question 12 4 pts The long run demand curve for an item. such as delicatessen sandwiches, tends to be more elastic than the short run demand curve for the same item because longer periods of time give the consumer a greater chance to seek . (rat in the blank \"is; one word, bum it'splnmiand wait]: your spelling} Question 13 2.5 pts If two goods are unrelated (e.g., walnuts & socks, or bicycles & printer paper), we would expect their cross-price elasticity of demand to be near: 0 1 O 10 OO O -1 Question 14 1.5 pts Acme Widget Corp. must use labor, wood, petroleum, titanium and widget making machines to produce a widget. Up until now, it was possible for the vendor of titanium to ship it to Acme within one week of Acme's order. Changing economic conditions, however, now require that the titanium used to produce widgets now be ordered six months in advance. The supply of widgets would would be more elastic as a result. O True O False Question 15 1.5 pts Refer to the question above. Prior to this change in economic conditions, a 10% increase in the demand for widgets would result in a $5 increase in the market price of widgets. Now, however, as a result of the change referred to in the question above, a 10% increase in the demand for widgets will result in an increase in the market price that is greater than $5. (Keep in mind that a more elastic supply curve has a flatter slope and a more inelastic supply curve has a steeper slope.) O True O FalseQuestion 16 The coefficient of income elasticity of demand for used clothing at the Good Will store is: O negative O positive O zero O direct Question 17 A recession, with its massive layoffs and dramatic wage cuts, will have the greatest negative impact on a product with a [1] (high, low, negative) coefficient of income elasticity of demand. Question 18 Which of the following is more likely to have a negative coefficient of income elasticity of demand? O community college education. O toothpaste O filet mignon O tickets to Washington Commanders gamesQuestion 19 2.5 pt Consider Scenario #1: The black cun'es represent the original equilibrium supply and demand. Assume the govei'iunem imposes a production tax of St per unit of output. Scenario 1 Scenario 2 Which distance represents the size of the tax? C:- A B '1'} A C.' -:':::- B c: Ci- None of the above Question 20 2.5 pts Consider again Scenario 1 in the question above: Which distance represents to burden of this production tax that is born by the consumer\"? OAB OAC OBC 0 None of the above Question 21 24 pts Fill in each of the following blanks with either the number i or 2: A) In which scenario does the majority of the burden of this tax fall upon the producer? B) In which case it is easier for the producers to pass the burden of this production tax onto the consumer\"? C) Which case best illustrates the results of a tax that is placed upon a product that consumers consider a highpriced luxury good= but it has a very short shelf life, and the resources out of which it is made are not readily available and not substitutable? D) W'hich case best illustrates the issue regarding the 1989 tax on luxury yachts and its subsequent repeal? E) \\'v'hich case best illustrates the results of a tax on the production of cigarettes if tobacco companies can easily switch to chewing tobacco or cannabis? F) Which case best illustrates the results of a tax on insulin (which is important for diabetics to help stabilize their blood sugar levels) if pharmaceutical companies can instead produce coronav'nus vaccines? Question 22 0.5 pts This one's only worth half a point so the total maximum score will be an even 100. True or false: The elasticity of a relationship refers to the sensitivity of the dependent variable to changes in the independent variable. The greater the impact, the more elastic the relationship. 0 True 0 False