Micro Economics Homework

 

CH4

  1. A life-saving medicine without any close substitutes will tend to have
  2. a small elasticity of demand. b. a large elasticity of demand. c. a small elasticity of supply. d. a large elasticity of supply.

 

 

  1. The price of a good rises from $8 to $12, and the quantity demanded falls from 110 to 90 units. Calculated with the midpoint method, the price elasticity of demand is
  2. 1/5. b. 1/2. c. 2. d. 5.

 

 

  1. A linear, downward-sloping demand curve is a. inelastic
  2. unit elastic. c. elastic. d. inelastic at some points, and elastic at others.

 

 

  1. The ability of firms to enter and exit a market over time means that, in the long run, a. the demand curve is more elastic. b. the demand curve is less elastic.
  2. the supply curve is more elastic. d. the supply curve is less elastic.

 

 

  1. An increase in the supply of a good will decrease the total revenue producers receive if a. the demand curve is inelastic. b. the demand curve is elastic.
  2. the supply curve is inelastic. d. the supply curve is elastic.

 

 

  1. Over time, technological advance increases consumers’ incomes and reduces the price of smartphones. Each of these forces increases the amount consumers spend on smartphones if the income elasticity of demand

is greater than ________ and if the price elasticity of demand is greater than ________. a. zero, zero b. zero, one

  1. one, zero d. one, one

 

CH5

 

 

  1. When the government imposes a binding price floor, it causes
  2. the supply curve to shift to the left. b. the demand curve to shift to the right. c. a shortage of the good to develop. d. a surplus of the good to develop.

 

 

  1. In a market with a binding price ceiling, an increase in the ceiling will ________ the quantity supplied, ________ the quantity demanded, and reduce the ________.
  2. increase, decrease, surplus b. decrease, increase, surplus c. increase, decrease, shortage d. decrease, increase, shortage

 

 

  1. A $1 per unit tax levied on consumers of a good is equivalent to
  2. a $1 per unit tax levied on producers of the good. b. a $1 per unit subsidy paid to producers of the good. c. a price floor that raises the good’s price by

$1 per unit. d. a price ceiling that raises the good’s price by

$1 per unit.

 

 

  1. Which of the following would increase quantity supplied, decrease quantity demanded, and increase the price that consumers pay? a. the imposition of a binding price floor b. the removal of a binding price floor c. the passage of a tax levied on producers d. the repeal of a tax levied on producers

 

 

  1. Which of the following would increase quantity supplied, increase quantity demanded, and decrease the price that consumers pay? a. the imposition of a binding price floor b. the removal of a binding price floor c. the passage of a tax levied on producers d. the repeal of a tax levied on producers

 

 

  1. When a good is taxed, the burden of the tax falls mainly on consumers if a. the tax is levied on consumers. b. the tax is levied on producers.
  2. supply is inelastic, and demand is elastic. d. supply is elastic, and demand is inelastic.