What is the shape of the demand curve faced by a perfectly competitive firm?

Horizontal
A profit-maximizing competitive firm will produce up to the point which......
marginal revenue equals marginal cost.
A competitive firm is said to maximize its profit when.......
the price is equal to marginal cost.
In the presence of technology spillovers, the market tends to ____________ and _____________ the product relative to societies best interest.
underproduce, overprice
Suppose that the last unit of output produced at a paper mill has a value to society of $10 and a social cost of $15, but the private cost to the
company is $10, and the current price is $10.
Which one of the following is true?

A) The market is in equilibrium, but a lower output would make society better off.

B) The market is in equilibrium, but a higher output would make society better off.

C) Output is too low and price is too high for equilibrium

D) Output is too high and price is too low for equilibrium

A
Which of the following describes when a deadweight loss from pollution cleanup occurs?

A) Whenever pollution cleanup imposes costs on society.

B) Whenever society puts a price tag on pollution, thus providing a "licence to pollute"

C) Whenever government gets involved

D) Whenever some units of pollution cleanup cost more than their marginal benefit to society.
D
True/False
When the government redistributes income by raising income taxes and increasing welfare payments, the economy becomes less equitable.
False
The economy becomes more equitable.
True/False
Adam Smith's "invisible hand" concept describes how corporate business reaches into the pockets of consumers like an "invisible hand".
1
False
The 'invisible hand" refers to how markets guide self-interested people to create desirable social outcomes.
Which one of the following involves a tradeoff faced by societies?

A) Buying a smartphone

B) Watching television

C) Taking a family vacation

D) Having a clean environment and a high level of income

D
Which one of the following shows where a monopolist produces?

A) MC=MR

B) MC=P

C) P=ATC

D) P > ATC
A
Stan buys a 1966 Mustang, which he plans to restore and sell. He anticipates that the cost of the car and the repairs will be $10,000 and that he
can sell it for $13,000. When he has spent $10,000, he discovers he needs to replace the engine, which will cost $4000. He can sell the car
without the new engine for $9000. What should Stan do?

A) He should complete the repairs and sell the car for $13,000

B) He should sell the car now for $9000

C) He should never try such an expensive project again.

D) He should be totally indifferent between finishing the project and selling the car now.
A
What is a technology spillover?
Positive Externality
2
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What does a deadweight loss from taxes in a market represent?
The loss in profit to producers when quantity demanded falls as a result of higher prices
To maximize profits, a firm sets outputs where

A) P=MC

B) MR=MC

C) P=ATC

D) MR=ATC
A
When a firm's demand curve is tangent to its average-total-cost curve, which is the result regarding economic profits/losses?

A) The firm's economic profit is zero.

B) The firm must be earning economic profits.

C) The firm must be incurring economic losses.

D) The firm must be operating in a monopolistically competitive market.

A
A profit-maximizing, competitive firm will hire an additional worker when the additional worker makes a positive contribution to which of the
following?

A) Total revenue

B) Total profit

C) The value of the marginal product of labour

D) Marginal revenue
B

3
Which of the following events would increase the demand for labour?

A) A decrease in output price.

B) A decrease in the amount of capital available for workers to use.

C) An increase in the marginal productivity of workers

D) An increase in the size of the labour force

C
When asymmetric information affects a relationship between two parties, what is always the case?

A) Neither party is well informed.

B) One part is better informed than the other.

C) Both parties are equally well informed.

D) The government is better informed that either of the two parties.

B
What is a perfectly elastic demand curve?
When the quantity demanded changes the same percent as the price does.

What is a perfectly inelastic demand curve?

When the quantity demanded changes less than the price does.

4
If price falls $11 to $9, quantity demanded increases from 80 to 120. What is the elasticity of demand, using the midpoint method.

A) 0.50

B) 1.00

C) 2.00

D) 4.00
A
Formula of midpoint elasticity
(B2 - B1) (A2 - A1)
--------- ÷ ----------
(B2 + B1) (A2 + A1)
Assume that a 4 percent increase in income results in a 6 percent decrease in the quantity demanded of a good. What is the income elasticity of
demand for the good, and what type of good is it?
Negative, the good is inferior
Duopoly
An oligopoly consisting of only two firms
What is a proportional tax?
Tax that takes the same percentage of income from all taxpayers regardless of income level
Nash Equilibrium
A situation in which each firm chooses the best strategy, given the strategies chosen by other firms
Marginal Tax Rate
The extra taxes paid on an additional dollar of income
Average Tax Rate
Total taxes paid divided by total income
Progressive Tax System
A tax for which high income taxpayers pay a larger fraction of their income that do low income taxpayers
Which one of the following is an example of internalizing an externality?

A) The municipal government offers subsides to homeowners to offset the cost of beautifying their front yards.

B) A restaurant no longer serves imported wine, having decided to offer only domestic wine.

C) A beekeeper buys extra hives to expand the business

5
D) The federal government reduces the income tax reduction for charitable donations.
A
Which one of the following would be achieved by the MOST efficent pollution control system?

A) Each polluter will clean up to the point where total social benefits are maximized.

B) Each polluter will clean up just to the point where that polluter's last unit of cleanup has a social value exactly equal to its social cost.

C) Each polluter will exactly the same pollution standards as all other polluters.

D) Each polluter will clean up the maximum level that is technically feasible.
B
An externality is...?
The uncompensated impact of one person's actions on the well-being of a bystander
Which one of the following is the BEST example of a tax justified under the benefit principle?

A) An inheritance tax

B) A hockey ticket tax to help pay for the building of a new hockey arena

C) An income tax to finance space exploration

D) A payroll tax to help fund education

B
Which one of the following is the essential problem with the existence of externalities?

A) A discrepancy between private and social cost.

B) A discrepancy between private benefit and social cost

C) A discrepancy between private cost and social benefit

D) Government failure
A
What is corporate income tax?
6
A direct tax imposed by a jurisdiction on the income or capital of corporations
What is a lump-sum tax?
A tax that is the same amount for every person
What is corrective tax?
Taxes enacted to correct the effects of negative externalities
When a positive externality is present,

A) the private value curve (demand) is below the social value curve for a product

B) the social cost curve is above the private cost curve (supply) of a product

C) the private curve (demand) is above the social value curve for a product

D) the social cost curve is below the private cost curve (supply) of a product
A
Which tax is the BIGGEST source of revenue for Canada's provincial government?
Individual income tax
PPF Graph

Supply and Demand Curve Graph

Producer/ Consumer Surplus Graph

Consumer surplus
+
Producer surplus
=
Economic (total) surplus
7
Price Floor Graph
* deadweight loss
* producer surplus
* consumer surplus

Price Ceiling Graph

* deadweight loss
* producer surplus
* consumer surplus

Per-Unit Tax with no Externalities Graph

A Firm's Cost Curve

8
Monopoly + PC Firm

Negative Externality

The structure of the Canadian federal income tax is progressive. Which one of the following best explains what this means?

A) Average tax rates that rise and marginal tax rates that are constant at most income levels

B) Average tax rates that are more than marginal tax rates at most income levels

C) Average tax rates that are less than marginal tax rates at most income levels

D) Average and marginal tax rates are equal and rise at most income levels
C
Which principle of taxation is associated with vertical equity and horizontal equity?
the ability-to-pay principle of taxation
What defines an efficient tax?
One that generates revenues at the least cost to the taxpayers

Example: lump-sum tax

Why do deadweight losses occur?

9
Taxes distort behaviour
The sum of the marginal cost of all units produced is?
Total variable cost
The production function is:
The relationship between factor inputs used in the production process of a good and the quantity of output of that good.
Which one of the following would be an effect of replacing income tax with a flat-rate consumption tax?

A) It would encourage less saving

B) It would make the tax system more progressive

C) It would mean the two families with the same income would not necessarily have the same tax bill

D) It would decrease the after-tax interest rate received on bank accounts

D
Suppose a persons average tax rate is 25% and the marginal tax rate is 40%. If the person receives an additional $100 of income, which one of
the following would be the amount of the implied additional tax payment?

A) $10

B) $25

C) $40

D) $65
C
If a person pays a $2000 tax on an income of $10,000, and $3000 on an income of $20,000, which one of the following is the tax structure?

A) Average

B) Marginal

C) Regressive

D) Progressive
C
10
Which of the following is true from a firm operating in a perfectly competitive market?

A) The firm can control neither its price nor its output

B) The firm can control its price, not its output

C) The firm can control its output but not its price

D) The firm can control both its price and its output
C
With the law of diminishing returns what occurs as output increases in the short-run?
Marginal cost will eventually rise.
The efficient scale of the firm is the quantity of output that minimizes ________.

A) average variable cost

B) average total cost

C) marginal cost

D) average fixed cost

B
Diminishing marginal product is a?
short-term concept
True/False
If there are no fixed cost, the average variable cost and the average total cost are the same
True
Which of the following explains when diminishing marginal product occurs?

A) Whenever a business is operating inefficiently, resulting in high per-unit costs.

B) Whenever the quantity of the available labour pool deteriorates and production costs rise.

C) Whenever business becomes so large that it is unwieldy to manage and productivity declines

D) Whenever additional workers add less to output than did the workers who came before
11
D
Which of the following is reflected by the demand for labour?

A) the marginal product of labour

B) the average product of labour

C) the value of the average product of labour

D) the value of the marginal product labour

D
Which of the following describes the outcome of an increase in the supply of labour in a competitive market?

A) It will increate the wage rate and the value of the marginal product.

B) It will increase the wage rate and decrease the value of the marginal product.

C) It will decrease the wage rate and the value of the marginal product.

D) It will decrease the wage rate and increase the value of the marginal product.
C
Which of the following will result from an increase in the demand for apples?

A) A decrease in apple pickers' wages

B) A decrease in the value of the marginal product of apple pickers

C) Higher short-run profits for apple growers

D) A decrease in the number of apple pickers employed

C
A firm's demand for a factor input, for example labour, slopes _____________.

A) upward, due to the increasing marginal product of labour

B) downward, due to the diminishing marginal product of labour

12
C) downward, due to the increasing wage rates

D) upward, due to the decreasing wage rates

B
As the wage rate increases due to a decrease in labour supply, which one go the following occur?

A) The value of the marginal product will fall

B) The value of the marginal product will rise

C) A shortage of labour will result

D) A surplus of labour will result

B
When the price of a product increases, the demand for factor inputs used to produce that product will ____________.

A) increase ---- that is, shift to the right

B) decrease ---- that is, shift to the left

C) not change

D) change its slope but not its position

A
A profit-maximizing competitive firm should hire workers up to the point where

A) the marginal product of labour equals the wage rate

B) the wage rate, the rental rate of capital, and the rental rate of land are all equal

C) the value of the marginal product of labour equals the wage rate

D) the marginal product of labour is maximum

C

13
Raising production will increase the total amount sold, which will decrease the per unit price and lower the profit on all other units sold. Which
one of the following is the name of this concept?

A) the price effect

B) the output effect

C) the cost effect

D) the income effect

A
What is a dominant strategy?
It is a strategy that is best for a player regardless of the strategies chosen by the other player
At a monopolist's profit-maximizing output
P > MC
Why is an unregulated monopoly is inefficient?
It equates marginal cost with marginal revenue, rather than its demand.
Where does a monopolist set price?
from the demand curve at the quantity for when MC=MR
How does a profit-maximizing competitive firm determine output?
by equating marginal revenue and marginal cost
What describes the shift caused by a $500 per automobile pollution tax on the manufacturers?
Supply curve up by $500
What is caused by a binding price ceiling?
Shortages
Suppose there is an excess capacity in the production facilities of a Bakery. The bakery's supply curve is said to be _______.
price elastic
What would decrease the demand for beer?
The price of a substitute (wine) falls.
which one of the following is essential to the scientific method?
a. that the scientist be objective
b. that only incorrect theories are tested
c. that the scientist use precision equipment
d. that the scientist use test tubes and have a clean lab
A
2
14
which of the following is MOST likely to produce scientific evidence about a theory
a. a radio talk-show host collecting data on how financial markets respond to taxation
b. a lawyer employed by GM addressing the impact of air bags on passenger safety
c. a tenured economist employed at a leading university analyzing the impact of proposed bank mergers
d. an economist employed by the Canadian auto workers union doing research on the impact of international trade
C
3
which of the following statements regarding the circular-flow diagram is true
a. the factors of production are owned by firms
b. the factors of production are owned by households
c. if Molson sells a case of beer, the transaction takes place in the market for factors of production
d. If Susan works for bell and receives a paycheck, the transaction takes place in the market for goods and services
B
4
which one of the following cases presents the MOST reasonable assumption?

a. to address the benefits of trade, an economist assumes that there are two people and two goods
b. to estimate the speed at which a beach ball falls, a physicist assumes that the it falls in a vacuum
c. to address the impact of money growth on inflation, an economist assumes that money is strictly coins
d. to address the impact of taxes on income distribution, an economist assumes that everyone earns the same income.
A
5
which of the following statements is true of economic models

a. built with assumptions

b. useless if they are simple
c. created to duplicate reality
d. usually made of wood and plastic
A
6
which of the following is NOT a factor of production

a. land
b. labour
c. capital
d. money
15
D
7
which one of the following refers to points inside the production possibilities frontier?
a. efficient
b. inefficient
c. unattainable
d. normative
B
8
which one of the following will NOT shift a country's production possibilities frontier outward
a. an increase in the capital stock
b. an advance in technology
c. a reduction in unemployment
d. an increase in the labour force
C
9
which one of the following is a depiction of economic growth

a. a movement from inside the curve toward the curve

b. a shift in the production possibilities frontier outward
c. a shift in the production possibilities frontier inward
d. a movement along a production possibilities frontier toward capital goods
B
10
see question 10
B
11
see question 11
D
12
see question 12
C
13
see question 13
C
14
16
which one of the following issues is related ot macroeconomics

a. the impact of growth in the quantity of money on inflation

b. the impact of rising gas prices on car sales
c. the impact of government regulations on the airline industry
d. the impact of foreign competition on the wine industry in Canada
A
15
which one of the following statements about microeconomics and macroeconomics is NOT true

a. microeconomics is a building block for macroeconomics

b. macroeconomics is concerned with economy-wide phenomena

c. microeconomics and macroeconomics each has its own set of models
d. the study of very large industries is a topic within macroeconomics
D
16
which one of the following statements is normative

a. printing too much money causes inflation

b. people work heard if the wage is higher
c. the unemployment rate should be lower
d. large gov deficits cause an economy to grow more slowly
C

If Japan has an absolute advantage in the production of an item, it must also have a comparative advantage in the production of that item.
False
absolute advantage compares the quantities of inputs used in production, while comparative advantage compares the opportunity costs.
Comparative advantage, not absolute advantage, determines the decision to specialize in production.
True
Absolute advantage is a comparison based on productivity.
True
Self-sufficiency is the best way to increase one's material welfare
False
restricting trade eliminates gains from trade.
Comparative advantage is a comparison based on opportunity cost.
17
True
If a producer is self-sufficient, the production possibilities frontier is also the consumption possibilities frontier.
True
If a country's workers can produce 6 pencils per hour or 18 rulers per hour, absent trade, the price of 1 ruler is 3 pencils.
False
the price of 1 ruler is one-third that of a pencil.
If producers have different opportunity costs of production, trade will allow them to consume outside their production possibilities frontiers.
True
Countries import goods for which they have a comparative advantage.
False
countries export goods in which they have a comparative advantage.
Hard work can enhance comparative advantage.
True
The gains from trade can be measured by the increase in total production and consumption that comes from specialization.
True
When a country removes a specific import restriction, it always benefits every worker in that country.
False
it may harm those involved in that industry
Canada has a comparative advantage in the production of pulp and paper.
True
If an advanced country has an absolute advantage in the production of everything, it will benefit if it eliminates trade with less developed
countries and becomes completely self-sufficient.
False
voluntary trade benefits all traders.
If gains from trade are based solely on comparative advantage, and if all countries have the same opportunity costs of production, then there are
no gains from trade.
True
Which one of the following situations is most likely for a nation that has an absolute advantage in the production of a good?
It can produce that good using fewer resources than its trading partner.
Which one of the following situations is most likely for a nation that has a comparative advantage in the production of a good?
It can produce that good at a lower opportunity cost than its trading partner
Which one of the following statements about trade is true?
Trade can benefit everyone in society because it allows people to specialize in activities in which they have a comparative advantage.
Which one of the following statements reflects the principle of comparative advantage?
Countries should specialize in the production of goods for which they have a lower opportunity cost of production than do their trading partners.
Which one of the following statements is true?
18
Canada has a comparative advantage in the production of natural resources.
Suppose a country's workers can produce 6 hats per hour or 24 ties per hour. Which one of the following is the domestic price of 1 tie if there is
no trade?
The domestic price of 1 tie is one-quarter of a hat.
Suppose a country's workers can produce 6 hats per hour or 24 ties per hour. Which one of the following is the opportunity cost of 1 hat if there
is no trade?
The opportunity cost of 1 hat is 4 ties.
The following table shows production data for Australia and Korea. Use this table for questions 8-15.
Output
Food (no. units/worker/month) Electronics (no. units/worker/month)
Australia 20 5
Korea 8 4
8. From the production data, which one of the following statements can be made about absolute advantage?

9. Which one of the following is the opportunity cost of 1 unit of electronics in Australia?

10. Which one of the following is the opportunity cost of 1 unit of electronics in Korea?

11. Which one of the following is the opportunity cost of 1 unit of food in Australia?

12. Which one of the following is the opportunity cost of 1 unit of food in Korea?

13. Which one of the following statements can be made about comparative advantage?

14. Which recommendation below would be the best for Korea?

15. Prices of electronics can be stated in terms of units of food. Which one of the following is the range of prices of electronics for which both
countries could gain from trade?
8. Australia has an absolute advantage in the production of both food and electronics.
9. 4 units of food
10. 2 units of food
11. one-quarter of a unit of electronics
12. one-half of a unit of electronics
13. Australia has a comparative advantage in the production of food, while Korea has a comparative advantage in the production of electronics.
14. specialize in electronics production, export electronics, and import food
15. The price must be greater than 2 units of food but less than 4 units of food.
19
Suppose the world consists of two countries: the United States and Canada. Further, suppose there are only two goods: food and clothing.
Which one of the following statements best represents the situation?
If the United States has a comparative advantage in the production of food, then Canada must have a comparative advantage in the production
of clothing.
For which one of the following does Argentina have a comparative advantage in production?
Beef
Which one of the following will Peru export?
Fruits
Which one of the following is the opportunity cost of producing a tonne of beef in Peru?
3 tonnes of fruit
Jane is a tax accountant. She receives $200 per hour for preparing tax returns. She can type 4000 characters per hour into spreadsheets. She
can hire an assistant who types 1000 characters per hour into spreadsheets. Which one of the following statements is the best recommendation?
Jane should hire the assistant as long as she pays the assistant less than $50 per hour.
Why do people choose to become interdependent as opposed to self-sufficient?
A consumer gets a greater variety of goods at a much lower cost than he or she could produce by himself or herself. That is, there are gains from
trade.
Why is comparative advantage instead of absolute advantage important in determining trade?
What is important in trade is how a country's costs without trade differ from another country's costs. This is determined by the relative opportunity
costs across countries.
What are the gains from trade?
The gains from trade are additional output and consumption that comes from countries with different opportunity costs of production specializing
in the production of the item for which they have the lower domestic opportunity cost.
Why is a restriction of trade likely to reduce economic welfare?
It forces people to produce at a higher cost than they would pay when they traded.
Suppose that a lawyer earning $200 per hour can also type at 200 words per minute. Should the lawyer hire a secretary who can type only 50
words per minute? Why or why not?
Yes, as long as the secretary earns less than $50 per hour, the lawyer is ahead.
Evaluate this statement: A technologically advanced country, which is better than its neighbour at producing everything, would be better off if it
closed its borders to trade, because the less productive country is a burden to the advanced country.
This is not true. All countries can gain from trade if their opportunity costs of production differ. Even the least productive country will have a
comparative advantage at producing something, and it can trade this good to the advanced country for less than the advanced country's
opportunity cost
Angela is a college student. She takes a full load of classes and has only 5 hours per week for her hobby. Angela is artistic and can make 2 clay
pots per hour or 4 coffee mugs per hour.
b. What is Angela's opportunity cost of 1 pot? 10 pots?

20
c. What is Angela's opportunity cost of 1 mug? 10 mugs?

d. Why is her production possibilities frontier a straight line instead of bowed out like those presented in Chapter 2?
b. 2 mugs; 20 mugs
c. one-half of a pot; 5 pots
d. Her resources can be moved from the production of one good to another at a constant rate.
absolute advantage
the comparison among producers of a good according to their productivity
生産性に応じた財の生産者間の比較
opportunity cost
whatever must be given up to obtain some item
アイテムを入手するために諦めなければならないものは何でも
comparative advantage
the comparison among producers of a good according to their opportunity cost
機会費用による財の生産者間の比較
imports
goods and services produced abroad and sold domestically
海外で生産され、国内で販売される商品およびサービス
exports
goods and services produced domestically and sold abroad

market
a group of buyers and sellers of a particular good or service
competitive market
a market in which there are many buyers and many sellers so that each has a negligible impact on the market price
quantity demanded
the amount of a good that buyers are willing and able to purchase
law of demand
the claim that, other things being equal, the quantity demanded of a good falls when the price of the good rises
demand schedule
a table that shows the relationship between the price of a good and the quantity demanded
demand curve
a graph of the relationship between the price of a good and the quantity demanded
normal good
a good for which, other things equal, an increase in income leads to an increase in demand
inferior good
21
a good for which, other things equal, an increase in income leads to a decrease in demand
substitutes
two goods for which an increase in the price of one leads to an increase in the demand for the other
complements
two goods for which an increase in the price of one leads to a decrease in the demand for the other
quantity supplied
the amount of a good that sellers are willing and able to sell
law of supply
the claim that, other things equal, the quantity supplied of a good rises when the price of the good rises
supply schedule
a table that shows the relationship between the price of a good and the quantity supplied
supply curve
a graph of the relationship between the price of a good and the quantity supplied
equilibrium
a situation in which the price has reached the level where quantity supplied equals quantity demanded
equilibrium price
the price that balances quantity supplied and quantity demanded
equilibrium quantity
the quantity supplied and the quantity demanded at the equilibrium price
surplus
A situation in which quantity supplied is greater than quantity demanded
shortage
A situation in which quantity demanded is greater than quantity supplied
law of supply and demand
the claim that the price of any good adjusts to bring the quantity supplied and the quantity demanded for that good into balance
A decrease in the price of soft drinks will increase their demand (shift the curve to the right).
False
quantity demanded, not demand, will increase.
A monopolistic market has only one seller.
True
At the equilibrium price, the amount that sellers are willing to sell is just equal to the amount that buyers are willing to buy.
True
An improvement in technology tends to reduce the supply (shift it to the left).
False
technology tends to increase the supply (shift it to the right) by increasing productivity; that is, increasing output per unit of input
An increase in raw materials prices tends to reduce the supply (shift it to the left).
22
True
If sellers expect prices to rise in the future, this could cause prices to rise today by encouraging sellers to reduce their current supply in
anticipation of a price hike.
True
A perfectly competitive market consists of products that are all slightly different from one another.
False
the goods offered for sale are all exactly the same.
A price that is below equilibrium results in excess supply.
False
price below equilibrium results in excess demand, as buyers try to buy more than sellers are willing to sell at the low price.
Excess demand tends to drive price up until the market reaches equilibrium price and quantity.
True
An increase in supply tends to increase equilibrium price and quantity.
False
increased supply moves the equilibrium to the right along the demand curve, resulting in a higher quantity and a lower price.
An equal increase in both supply and demand tends to increase equilibrium price and quantity.
False
an increase in both supply and demand will increase equilibrium quantity, but the effect on price depends on which curve shifts more; if they shift
equally, price remains unchanged.
An increase in supply accompanied by an equal decrease in demand tends to decrease equilibrium price, while leaving equilibrium quantity
unchanged.
True
The market demand curve is the horizontal summation of all the individual demand curves.
True
If golf clubs and golf balls are complements, then an increase in the price of golf clubs will decrease the demand for golf balls.
True
If pizza and hamburgers are substitutes for each other, a decrease in the price of pizza would increase the demand for hamburgers.
False
a decrease in the price of a good tends to decrease the demand for its substitutes.
Which one of the following would decrease the demand (shift the curve to the left) for beer?
a. The price of a substitute, wine, falls.
b. The price of beer increases to $5.00 per bottle.
c. Bars begin giving away spicy snacks to their customers.
d. A new Health Canada study concludes that beer helps to reduce heart disease.
A

23
If buyers believe that the price of gasoline will rise soon, which one of the following is the MOST likely immediate result?
a. an increase in the quantity demanded, due to the change in supply
b. a decrease (shift to the left) in the demand for gasoline, due to a shift to substitutes
c. a decrease (shift to the left) in the demand for gasoline, due to a change in tastes
d. an increase (shift to the right) in the demand for gasoline, due to a change in expectations
B
A new technological breakthrough in genetic engineering makes it possible to grow twice as much corn per hectare as had been possible in the
past. Which one of the following is the MOST likely outcome of this development?
a. an increase in the demand for corn, due to the greatly reduced price
b. an increase in quantity supplied, due to the increased willingness to sell corn
c. an increase (shift to the right) in the supply of corn, due to the reduced cost of production
d. a decrease (shift to the left) in the supply of corn, due to the increased costs associated with the new technology
C
A university student made the following statement to a friend at a university sporting event: "This football stadium is a good example of how
unrealistic economics is: My economics professor claims that, according to a so-called 'Law of Supply,' the quantity supplied varies directly with
price, yet anybody can look around and see that the quantity supplied is fixed at 10 000 seats, no matter what the price is!" Which one of the
following explains what is wrong with the student's statement?
a. Quantity supplied is not fixed at 10 000 seats; it is quantity demanded that is fixed.
b. This is simply an exception to the Law of Supply; it does not mean that it is not relevant for most cases.
c. Quantity supplied is not the same thing as the physical stock of a good or service that is available; rather, quantity supplied is the amount of a
good that sellers are willing and able to sell.
d. The Law of Demand is more important than the Law of Supply in these types of cases.
C
-Referring to the graph above, which one of the following describes the initial equilibrium price and quantity?
a.P = $2.00; Q = 75
b.P = $2.00; Q = 150
c.P = $3.00; Q = 100
d.P = $4.00; Q = 75
C
-Which one of the following would cause the demand for pizzas among university students to shift to the right?
a. an increase in financial aid to university students
b. half-price pizzas for anybody with a university ID
c. an increase in the price of a complement, that is, beer
d. a decrease in the price of a substitute, that is, hamburgers
A

24
-After an increase in demand, which one of the following describes the new equilibrium price and quantity?
a.P = $2.00; Q = 75
b.P = $2.00; Q = 150
c.P = $3.00; Q = 100
d.P = $4.00; Q = 150
D
-Which one of the following describes the effect of the increase in demand on supply?
a. It would first increase, then decrease over time.
b. It would neither increase nor decrease, although quantity supplied would increase.
c. It would decrease (shift to the left).
d. It would increase (shift to the right).
B
-Referring to the graph above, which one of the following describes the initial equilibrium price and quantity?
a.P = $5; Q = 375
b.P = $10; Q = 350
c.P = $20; Q = 100
d.P = $40; Q = 200
D
-Which one of the following is a factor that would cause an increase (shift to the right) in supply?
a. improved technology
b. higher labour costs
c. lower number of sellers
d. increased demand
A
-Which choice below would be the new equilibrium price and quantity as a result of the increase in supply?
a.P = $5; Q = 375
b.P = $10; Q = 350
c.P = $20; Q = 100
d.P = $30; Q = 250
A
-Suppose that the demand for calculators rose even more than the supply had increased. Which one of the following describes the changes in
equilibrium price and quantity that would be the net effect of the two increases?
a. an increase in price but a decrease in quantity
b. an increase in quantity but a slight decrease in price
c. decreases in both quantity and price
d. increases in both quantity and price
25
D
Which one of the following describes what supply curves represent?
a. inventories
b. physical stocks
c. total production
d. willingness to sell
D
Which one of the following does a supply curve for a good or service show?
a. the seller's target price
b. the seller's minimum acceptable price
c. the seller's maximum acceptable price
d. the seller's average acceptable price
B
If equilibrium quantity rises but equilibrium price remains unchanged, which one of the following is the cause?
a. an increase in both supply and demand
b. a decrease in both demand and supply
c. a decrease in demand and an increase in supply
d. an increase in demand and a decrease in supply
A
If equilibrium price rises but equilibrium quantity remains unchanged, which one of the following is the cause?
a. a decrease in demand and an increase in supply
b. an increase in demand and a decrease in supply
c. an increase in both supply and demand
d. a decrease in both demand and supply
B
Suppose there is an increase in both the supply and the demand for laptop computers. Which one of the following would we expect in the market
for laptop computers?
a. an increase in both equilibrium quantity and equilibrium price
b. an increase in equilibrium quantity and a decrease in equilibrium price
c. an increase in equilibrium quantity; the impact on equilibrium price is ambiguous
d. a decrease in equilibrium price; the impact on equilibrium quantity is ambiguous
C
A freeze that destroys half the coffee crop in South America would likely raise the price of coffee. Which one of the following would happen in
turn?
a. reduced demand for both coffee and tea
b. reduced quantity demanded for both coffee and tea
26
c. reduced demand for coffee and increased demand for tea
d. reduced quantity demanded for coffee and increased demand for tea
D
Which one of the following describes an inferior good?
a. one for which demand rises as income rises
b. one for which demand falls as income rises
c. one for which demand is unrelated to income
d. one for which demand is low because of the low quality of the good
B
Suppose that there is a shortage of parking spaces in downtown Toronto during weekdays. Which one of the following would eliminate the
shortage?
a. lowering the price
b. decreasing the supply
c. allowing the price to rise
d. increasing the quantity demanded
C
What would happen to the demand for apples if consumers' incomes rose and apples are a normal good? What if apples are an inferior good?
An increase in consumer income increases the demand for normal goods and decreases the demand for inferior goods.
Explain why the price of a complement or a substitute can alter the demand for a good, even though the price of the good itself does not shift the
demand.
Prices of other goods are held constant in deriving a demand curve, even though they can affect consumption. When they change, the demand
also changes (shifts right or left). The price of the good itself does not shift the demand, however, because price is already built in to our
definition of demand. Demand for a good includes all the quantities that consumers are willing to buy at various prices of the good, thus holding
other factors constant.
What are the two main characteristics of a perfectly competitive market?
The goods offered for sale are all exactly the same, and no single buyer or seller has any influence over the price.
What are the variables that should affect the amount of a good that consumers wish to buy, other than its price?
income, prices of related goods, tastes, expectations, and number of buyers
What are the variables that should affect the amount of a good that producers wish to sell, other than its price?
input prices, technology, expectations, and number of sellers
-Plot the supply and demand curves for the initial supply and demand, QS and QD, on the graph that follows the questions.
a. The equilibrium price of corn is $_________ per tonne.
b. The equilibrium quantity of corn is _________ thousand tonnes.
c. At a price of $3.00 per tonne, there would be a (shortage, surplus) _________ of _________ thousand tonnes, and the price would tend to
(fall, rise) _________.

27
d. At a price of $5.00 per tonne, there would be a (shortage, surplus) _________ of _________ thousand tonnes, and the price would tend to
(fall, rise) ___________.
a. $4.50 per tonne
b. 280 thousand tonnes
c. shortage; 180 thousand tonnes; rise
d. surplus; 60 thousand tonnes; fall
-Suppose that the supply of corn increased by 60 thousand tonnes at every price. Show the new supply schedule as QS′ on the previous table.
a. The new equilibrium price of corn is $_________per tonne.
b. The new equilibrium quantity of corn is _________ thousand tonnes.
c. Has the demand for corn changed as a result of this change in supply? Explain briefly.
a. $4.00 per tonne
b. 300 thousand tonnes
c. Demand has not changed. Supply increased, thus moving the equilibrium along the existing demand curve, to a higher quantity and lower
price.
-Give an example of a factor that could have caused such an increase in the supply of corn, and explain briefly.
Any of the factors that lower cost of production could shift the supply to the right, indicating increased willingness to sell at each price. For
example, improvements in technology that increase productivity would lower cost and increase supply.
-Notice that the increase in supply has resulted in a lower price and a higher quantity. Does this violate the Law of Supply, which states that the
quantity supplied of a good increases as its price increases, all else being equal? Explain briefly.
No, this does not violate the Law of Supply. The Law of Supply holds other factors, such as technology, constant. The increase in supply
represents a new supply curve, with an increased willingness to sell. Both the old and the new supply curves follow the Law of Supply: as long as
those other factors are constant, sellers will tend to be willing to sell more, but only at a higher price.
1. Suppose that coffee had started out at an equilibrium price of $1.00 per pound prior to the freeze.
a. Show graphically the initial equilibrium, labelling supply and demand as S1 and D1, respectively. Use Q1 to identify the original equilibrium
quantity.

b. Show graphically the effect of a freeze that destroys much of the coffee crop, labelling the new supply as S2 and the new equilibrium quantity
as Q2. (The new equilibrium price is $4.42.)

c. Does the answer to part (b) show a change in demand? Why or why not?

d. Based on your analysis in parts (a-c), critique the Wall Street Journal editorial. What's wrong with its analysis?
a. The original equilibrium should be at a price of $1.00, with the quantity simply labelled Q1.
b. The new equilibrium should be at a price of $4.42 and a quantity of Q2, after a leftward shift in supply and a movement along the (unchanged)
demand curve. Equilibrium price is higher and quantity is lower.
c. Demand did not change; only the quantity demanded changed as the supply shifted left, thus moving along the existing demand curve. There
28
were no changes in the factors that are held constant in deriving a demand curve.
d. The newspaper's analysis was flawed. They confused (shifts in) demand with simple changes in quantity demanded in response to a price
change. For the price to fall, one of the factors (other than price) affecting either supply or demand must have changed.
Suppose that the demand function for pizza is given by QD = 70 − 4P and that the supply function for pizza is given by QS = −20 + 5P. Which
one of the following describes the equilibrium price and quantity of pizza?
a.P = $10; Q = 10
b.P = $10; Q = 30
c.P = $30; Q = 10
d.P = $30; Q = 30
B
Suppose now that the price of hamburgers increases and, as a result, the demand for pizza increases to QD = 88 − 4P. Which one of the
following describes the new equilibrium price and quantity of pizza?
a.P = $10; Q = 30
b.P = $10; Q = 40
c.P = $12; Q = 30
d.P = $12; Q = 40
D
Suppose that the supply function for laptop computers is given by QS = 1000 + 2P and that the demand function for laptop computers is given by
QD = 4000 − 3P. Which one of the following describes the equilibrium price and quantity of laptop computers?
a.P = $600; Q = 600
b.P = $600; Q = 2200
c.P = $800; Q = 600
d.P = $800; Q = 2200
B
Suppose now that there is an improvement in technology in the production of laptop computers and, as a result, the supply of laptop computers
increases to QS = 2000 + 2P. Which one of the following describes the new equilibrium price and quantity of laptop computers?
a.P = $400; Q = 2200
b.P = $400; Q = 2800
c.P = $600; Q = 2200
d.P = $600; Q = 2800
B
Suppose that the supply function for apples is given by QS = 900 + 30P. Which one of the following demand functions will result in an equilibrium
price for apples of $2 per kilogram?
a.QD = 800 − 10P
b.QD = 800 − 20P

29
c.QD = 900 − 10P
d.QD = 1000 − 20P
D
-What is the x-intercept of the supply curve?
40
-What is the y-intercept of the supply curve?
-4
-What is the slope of the supply curve?
1/10
-What is the x-intercept of the demand curve?
160
-What is the y-intercept of the demand curve?
8
-What is the slope of the demand curve?
-1/20
-What is the equilibrium price of peaches?
$4.00
-What is the equilibrium quantity of peaches?
80
elasticity
a measure of the responsiveness of quantity demanded or quantity supplied to one of its determinants

要求量またはその決定要因の 1 つに供給された量の応答性の尺度
price elasticity of demand
a measure of how much the quantity demanded of a good responds to a change in the price of that good, computed as the percentage change in
quantity demanded m divided by the percentage change in price

財の需要量がその財の価格の変化にどれだけ反応するかの尺度。需要量の変化率 m を価格の変化率で割って計算される
total revenue
(in a market) TR
the amount paid by buyers and received by sellers of a good, computed as the price of the good times the quantity sold

買い手が支払い、商品の売り手が受け取る金額。商品の価格に販売数量を掛けたものとして計算
Price ✖️quantities
income elasticity of demand

30
a measure of how much the quantity demanded of a good responds to
a change in consumers' income, computed as
the percentage change in quantity demanded divided by the percentage change in income

の量は良い応答を求め、どのくらいの尺度
消費者の収入の変化。
量の変化率は、所得の変化率で割った要求しました
cross-price elasticity of demand
a measure of how much the quantity demanded of one good responds to
a change in the price of another good, computed as the percentage change in quantity demanded of the first good divided by the percentage
change in the price of the second good

どれだけの量が要求されたかの尺度
良いのは
別の商品の価格の変化。最初の商品の需要量の変化率を 2 番目の商品の価格の変化率で割って計算されます。
price elasticity of supply
a measure of how much the quantity supplied of a good responds to a change in the price of that good, computed as the percentage change in
quantity supplied divided by the percentage change in price

財の供給量がその財の価格の変化にどれだけ反応するかの尺度。供給量の変化率を価格の変化率で割って計算される
△Percentage quantities /△percentage price
If the quantity demanded of a product is sensitive to a change in its price, the demand for that product is said to be price elastic.
製品の需要量が価格の変化に敏感な場合、その製品の需要は価格弾力性があると言われています。
True
The demand for cell phones is more price elastic than the demand for iPhone
携帯電話の需要は、iPhone の需要よりも価格弾力性が高い
False
A normal good is one for which the income elasticity is greater than one.
通常の財とは、収入の弾力性が 1 より大きいものです。
False
A good perceived by the consumer to be a necessity will tend to have an elastic demand.
消費者が必要であると認識する良いものは、弾力的な需要を持つ傾向があります。
False
For a good with a price elasticity of demand of 0.8, an increase in price will cause total consumer spending on that good to rise.
需要の価格弾力性が 0.8 の商品の場合、価格の上昇により、その商品に対する総消費支出が増加します。
True

31
The supply of beef for this week is likely to be more price inelastic than the supply of beef over three years.
今週の牛肉の供給は、3 年間の牛肉の供給よりも価格に弾力性がない可能性があります。
True
If Dennis allocates $24 as his monthly expenditure on beer, and he spends no more and no less, regardless of price, then his demand for beer is
unit elastic.
デニスがビールの 1 か月の支出として 24 ドルを割り当て、価格に関係なく、それ以上でもそれ以下でも支出しない場合、ビールの需要は単位
弾力性があります。
True
If the price elasticity of supply for wheat is 0.30, an increase of 10 percent in the price of wheat would increase the quantity supplied of wheat by
30 percent.
小麦の供給の価格弾力性が 0.30 である場合、小麦の価格が 10％上昇すると、小麦の供給量が 30％増加します。
False
The supply of land overlooking the Niagara River is highly price elastic.
ナイアガラ川を見下ろす土地の供給は、非常に弾力的です。
False
If price elasticity of demand is zero, then any price change will also have a zero effect on total revenue.
需要の価格弾力性がゼロの場合、価格の変更は総収益にも影響しません。
False
If the price elasticity of demand is 0.5, which of the following will a 20-percent price hike lead to?
需要の価格弾力性が 0.5 の場合、20％の値上げは次のうちどれにつながりますか？
a. 5-percent drop in quantity demanded
b. 10-percent drop in quantity demanded
c. 20-percent drop in quantity demanded
d. 40-percent drop in quantity demanded
B
A city is considering a fare hike for its city bus service. At the current fare of $2.00, daily ridership is 24 000 people. The city estimates that if it
raises fares to $2.50, ridership will decline to 21 000. ある都市では、市内バスの料金引き上げを検討しています。 現在の運賃は 2.00 ドルで、1
日の乗車人数は 24,000 人です。 市は、運賃を$ 2.50 に引き上げると、乗船者数が 21,000 に減ると推定しています。

2. Using the midpoint method of calculating elasticity, which of the following is the price elasticity of demand?
2.弾性を計算する中点法を使用して、需要の価格弾性は次のうちどれですか？
a. 0.0
b. 0.6
c. 1.0
d. 6.0
32
3. Which of the following is recommended if the city wants to raise more revenue from its bus system?
a. Raise the price to $2.50.
b. Keep the price at $2.00 and wait for demand to increase.
c. First lower the price to attract riders, then gradually increase the price.
d. First raise the price to get revenues, then lower the price after the buses are paid off.
3.都市がバスシステムからより多くの収入を上げたい場合、次のうちどれが推奨されますか？
a。 価格を 2.50 ドルに引き上げます。
b。 価格を 2.00 ドルに保ち、需要が増加するのを待ちます。
c。 最初に価格を引き下げてライダーを引き付け、次に価格を徐々に上げます。
d。 最初に価格を上げて収入を得てから、バスが完済した後に価格を下げます。
B
Suppose the Minister of Health wants to reduce cigarette smoking by increasing tobacco taxes. Which one of the following describes why it will
probably take a fairly large tobacco tax to make much of a difference?
a. Price is irrelevant for consumers.
b. Supply of tobacco is relatively inelastic.
c. Demand for cigarettes is totally inelastic.
d. Demand for cigarettes is relatively inelastic.
保健大臣がたばこ税を引き上げることによりたばこ喫煙を減らしたいと考えているとします。 次のどれが、おそらく大きな違いを生むのにか
なり大きなタバコ税がかかるのかを説明していますか？
a。 消費者にとって価格は無関係です。
b。 タバコの供給は比較的弾力的ではありません。
c。 タバコの需要は全く弾力的ではありません。
d。 タバコの需要は比較的弾力的ではありません。
A
As income rises during economic upturns, consumption of potatoes declines, yet as income falls during economic downturns, consumption of
potatoes rises. Which one of the following is the likely explanation for the changes in potato consumption?
a. high income elasticity of demand
b. very high price elasticity of supply
c. very low price elasticity of demand
d. negative income elasticity of demand
景気の回復中に収入が増加すると、ジャガイモの消費量は減少しますが、経済の衰退中に収入が減少すると、ジャガイモの消費量が増加しま
す。 次のどれがジャガイモの消費量の変化の可能性のある説明ですか？
a。 需要の高い所得弾力性
b。 供給の非常に高い価格弾力性
c。 需要の非常に低い価格弾力性
d。 需要の負の所得弾力性
33
D
Which one of the following statements is true?
a. When the price of meat rises, the supply of hamburgers falls.
b. When the price of pencils falls, the quantity supplied of pencils rises.
c. When the weather gets hotter, the quantity demanded for ice cream rises.
d. Cross-price elasticity for two goods is negative if they are complements.
次のうち、正しいものはどれですか？
a。 肉の価格が上昇すると、ハンバーガーの供給が低下します。
b。 鉛筆の価格が下がると、鉛筆の供給量が増えます。
c。 天気が暑くなると、アイスクリームに必要な量が増えます。
d。 2 つの商品の価格を超えた弾力性は、それらが補完的なものである場合、マイナスになります。
D
Suppose there is excess capacity in the production facilities of Judith's Bakery. The bakery's supply curve is said to be
a. price elastic.
b. price inelastic.
c. unit price elastic.
d. perfectly price inelastic.
Judith's Bakery の生産施設に過剰生産能力があると仮定します。 パン屋の供給曲線は
a。 価格弾力性。
b。 弾力性のない価格。
c。 単価弾性。
d。 完全に非弾性の価格。
D
A fisherman must sell all of his daily catch before it spoils for whatever price is offered. The fisherman's price elasticity of supply for fresh fish is
a. one.
b. infinite.
c. zero.
d. between zero and one.
漁師は、提供されている価格にかかわらず、毎日の漁獲量をすべて売らなければなりません。 新鮮な魚の供給の漁師の価格弾力性は
A
Which of the following is the income elasticity of demand for housing if people always spend 25 percent of their income on housing?
a. 0.25
b. 1.00
c. 2.50
d. 25.00
人々が常に収入の 25％を住宅に費やしている場合、住宅需要の所得弾力性は次のうちどれですか？
34
C
Which one of the following is the likely outcome of the prevailing laws aimed at reducing the supply of illegal drugs?
a. The laws reduce drug consumption but increase drug-related income and crime.
b. The laws reduce both drug consumption and drug-related income and crime.
c. The laws increase both drug consumption and drug-related income and crime.
d. The laws increase drug consumption but reduce drug-related income and crime.
次のうち、違法薬物の供給を減らすことを目的とした現行法の結果として考えられるものはどれですか？
a。 法律は薬物消費を削減しますが、薬物関連の収入と犯罪を増加させます。
b。 法律は、薬物消費と薬物関連収入および犯罪の両方を削減します。
c。 法律は、薬物消費と薬物関連の収入と犯罪の両方を増加させます。
d。 法律は薬物消費を増加させますが、薬物関連の収入と犯罪を減少させます。
B
When a percentage change in the price of a service changes the quantity demanded for that service significantly, the demand for that service is
a. unit price elastic.
b. price inelastic.
c. price elastic.
d. income inelastic.
サービスの価格の割合の変化により、そのサービスの需要量が大幅に変化すると、そのサービスの需要は
a。 単価弾性。
b。 弾力性のない価格。
c。 価格弾力性。
d。 収入が非弾性。
A
. If a 20-percent decline in price leads to a 30-percent decrease in quantity supplied, then
a. price elasticity of demand is 1.5.
b. price elasticity of supply is 1.5.
c. price elasticity of demand is 3.0.
d. price elasticity of supply is 3.0.
。 価格が 20％低下すると、供給量が 30％減少する場合、
a。 需要の価格弾力性は 1.5 です。
b。 供給の価格弾力性は 1.5 です。
c。 需要の価格弾力性は 3.0 です。
d。 供給の価格弾力性は 3.0 です。
C
Which one of the following is the MAIN reason that the Organization of the Petroleum Exporting Countries (OPEC) has NOT been able to keep
oil prices high?
35
a. Government regulations have prevented it.
b. Supply tends to be more inelastic in the long run.
c. Demand tends to become more elastic in the long run.
d. Massive new petroleum discoveries have increased the supply
.石油輸出国機構（OPEC）が原油価格を高く維持できなかった主な理由は次のうちどれですか？
a。 政府の規制がそれを妨げています。
b。 供給は長期的にはより非弾性になる傾向があります。
c。 需要は、長期的にはより弾力的になる傾向があります。
d。 大規模な新しい石油の発見により、供給量が増加しました。
B
If price elasticity of supply tends to be higher, which one of the following will be the outcome?
a. The time period will be longer.
b. It will be easier for more new firms to enter the industry.
c. Firms can be more adaptable to changing market conditions.
d. The demand will be higher.
供給の価格弾力性がより高い傾向にある場合、次のどれが結果になりますか？
a。 期間は長くなります。
b。 より多くの新しい企業が業界に参入しやすくなります。
c。 企業は、変化する市場状況により適応できる可能性があります。
d。 需要は高くなります。
C
Suppose Bill buys one six-pack of beer each week, regardless of price, and he drinks it on Saturday night. Which one of the following statements
is correct?
a. Price elasticity of demand is 0.
b. Price elasticity of demand is 1.
c. Price elasticity of demand is 6.
d. Price elasticity of supply is greater than 1.
ビルが価格に関係なく毎週 6 パックのビールを購入し、土曜日の夜にビールを飲むとします。 次の記述のうち正しいものはどれですか？
A
For a given increase in demand, which of the following indicates when price increases the MOST?
a. Supply is elastic.
b. Supply is inelastic.
c. Supply is unit elastic.
d. Supply is perfectly elastic.
需要が増加した場合、価格が MOST を上昇させるタイミングは次のうちどれですか。
a。 供給は弾力的です。
36
b。 供給は非弾性です。
c。 供給はユニットエラスティックです。
d。 供給は完全に弾力的です。
A
Which one of the following describes the elasticity of a straight-line (constant-slope) demand curve?
a. Elasticity remains constant along its length.
b. Elasticity increases as quantity demanded increases along its length.
c. Elasticity decreases as quantity demanded increases along its length.
d. Elasticity first increases and then decreases as quantity demanded increases.
次のうち、直線（一定勾配）の需要曲線の弾力性を説明するものはどれですか？
a。 弾性はその長さに沿って一定のままです。
b。 要求される量がその長さに沿って増加するにつれて、弾力性が増加します。
c。 要求される量がその長さに沿って増加するにつれて、弾力性は減少します。
d。 弾力性は最初に増加し、その後、需要量が増加するにつれて減少します。
B
Which one of the following is the cross-price elasticity of demand for orange golf balls with respect to any change in the price of white golf balls?
a. positive and probably high
b. negative and probably high
c. positive and probably low
d. negative and probably low
白いゴルフボールの価格の変化に対するオレンジゴルフボールの需要の価格間の弾力性は次のうちどれですか？
a。 ポジティブでおそらく高い
b。 負でおそらく高い
c。 ポジティブでおそらく低い
d。 負でおそらく低い
C
If the demand for a good is price elastic,
a. suppliers can increase their revenue by securing a price below the current level.
b. suppliers can increase their revenue by restricting supply.
c. suppliers can increase their revenue by securing a price above the current level.
d. suppliers can increase their revenue if they can devise technology that will increase supply.
財に対する需要が価格弾力性である場合、
a。 サプライヤーは、現在のレベル以下の価格を確保することにより、収益を増やすことができます。
b。 サプライヤーは、供給を制限することで収益を増やすことができます。
c。 サプライヤは、現在のレベルを超える価格を確保することで収益を増やすことができます。
d。 サプライヤーは、供給を増やす技術を考案できれば、収益を増やすことができます。
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A
Which one of the following describes a circumstance in which an increase in demand will NOT have any effect on price?
a. where supply is unit elastic
b. where supply is perfectly elastic
c. where supply is perfectly inelastic
d. where supply is a straight line through the origin
次のうち、需要の増加が価格に影響を与えない状況を説明しているものはどれですか？
a。 供給は単位弾性です
b。 供給が完全に弾力性がある場合
c。 供給が完全に非弾性である場合
d。 供給は原点を通る直線です
D
Could a new mid-priced car, such as a 2017 Ford Fusion, be both a normal good and an inferior good? Explain.
2017 年のフォードフュージョンなどの新しい中価格の車は、普通の商品と劣悪な商品の両方になり得ますか？ 説明してください。 _
B
If the price of fuel rises by 10 percent and stays at that level, the reduction in the volume of fuel consumed in the short run is more than that in
the long run.
燃料の価格が 10％上昇し、そのレベルにとどまる場合、短期的に消費される燃料の量の削減は長期的に比べて大きくなります。

b. If the consumer's income goes up by 10 percent, the amount of fuel consumed will increase by 4 percent within a year and by 10 percent in
the long run. These changes suggest that fuel is considered to be an inferior good.
b。 消費者の収入が 10％増加すると、燃料消費量は 1 年以内に 4％増加し、長期的には 10％増加します。 これらの変化は、燃料が劣悪なもの
と見なされることを示唆しています。
Goods are not likely to have constant income elasticity over all income ranges. Many products are normal goods initially, but, as income rises,
they often become inferior goods as people switch to more upscale products. For example, a mid-priced automobile tends to have fairly high
income elasticity for most people, but above a certain income level, the income elasticity actually becomes negative, as people substitute more
expensive automobiles for the mid-priced models. Even a luxury model could be an inferior good for some very high-income consumers
商品は、すべての収入範囲にわたって一定の収入弾力性を持つ可能性はありません。 多くの製品は、最初は通常の商品ですが、収入が増加す
るにつれて、人々がより高級な製品に切り替えると、しばしば劣った商品になります。 たとえば、中価格帯の自動車はほとんどの人にとって
かなり高い所得弾力性を持つ傾向がありますが、特定の所得レベルを超えると、中価格帯のモデルをより高価な自動車に置き換えるため、所得
弾力性は実際にマイナスになります。 高級モデルでさえ、一部の非常に高所得の消費者にとっては劣った商品になる可能性があります
What is the slope of the demand curve for sofas? _
False. A 10 percent increase in the price of fuel reduces the volume of fuel consumed by 2.5 percent (= 0.25 × 10%) in the short run and by 6.4
percent (= 0.64 × 10%) in the long run.
What is the elasticity

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Suppose the Minister of health wants to redo cigarette smoking by increasing tobacco taxes. Which one of the following describes why it will probably take a
fairly large tobacco tax to make much of a difference?
A) Price is irrelevant for consumers
B) supply of tobacco is relatively inelastic
C) demand for cigarettes is totally inelastic
D) demand for cigarettes is relatively inelastic
D
2
As income rises during economic upturn's, consumption potato declines, yet as income falls during economic downturn's, consumption potatoes rises. Which
one of the following is likely explanation for the change in potato consumption?
A)) high income elasticity of demand
B) very high price elasticity of supply
C) very low price elasticity of demand
D) negative income elasticity of demand
D
3
Suppose there is excess capacity in the production facility of Jesus bakery. The bakery supply curve is said to be
Price elastic
4
Fisherman must sell all of his daily cash before it spoils for whatever price is offered. The Fishermans price elasticity of supply for fresh fish is
Zero
5
Which of the following is the income elasticity of demand for housing if you bola we spent 25% of their income on housing?
1.00
6
Which one of the following is the main reason that OPEC has not been able to keep oil prices high
A) Government regulations have prevented it
B). Supply tends to be more inelastic in the long run
C) demand tends to be more elastic in the long run
D) massive new petroleum discoveries have increase the supply
C
7
If price elasticity of supply tends to be higher, which one of the following will be the outcome?
A) The time period Will be longer
B) it will be easier for more new firms to enter the industry
C) The firms can be more adaptable to changing market conditions
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D) The demand will also be higher
A
8
Supposed bill buys one six pack of beer in each week, regardless of price, and he drinks it on Saturday night. Which one of the following statements is correct
A) Price elasticity of demand is zero
B) Price elasticity of demand is ones) Price elasticity of demand is six
D) Price elasticity of supply is greater than one
A
9
Which one of the following describes the elasticity of the street line or constant slope demand curve
A) elasticity remains constant along its length
B) elasticity increases as quantity demanded increases along its length
C) elasticity decreases as quantity demanded increases along its length
D) elasticity first increases and then decreases as quantity demanded increases
C
10
which one of the following is the cross price elasticity of demand for orange golf balls with respect to any change in the price of white golf balls?
A) positive and probably high
B) negative and probably high
C) positive and probably low
D) negative and probably low
A
11
If the demand for goods price elastic,
A) suppliers can increase the revenue by securing a price below the current level
B) suppliers can increase their revenue by restricting supply
C) suppliers can increase the revenue by securing a price above the current level
D) suppliers can increase the revenue if they can devise technology that will increase supply
D
12
Which one of the following describes the circumstance in which an increase in demand will not have any affect on price
Where supply is perfectly elastic
13
If the price elasticity of demand is 0.5, which of the following will pay 20% price hike the to?
B why ???

40
C1.
Part A,
Supply curve => P=100+6Q
Demand Curve=> P= 500-2Q
At equilibrium P, supply=demand, so
At equilibrium,
100+6Q =500-2Q
8Q= 400
Q=400/8
Q=50
So the equilibrium quantity is 50,
At this quantity, the price will be,
Equilibrium price= P=100+6*50=400

Total expenditures on Cigrets= demand x equilibrium price

=50*400= 20,000
Total revenue- 50*400=20000
Part b,

After the imposition of sales tax, the new supply curve will be,
Supply curve => P=100+6Q+8=108+6Q
Demand Curve=> P= 500-2Q
At equilibrium,
108+6Q=500-2Q
8Q=392
Q=49
The new equilibrium quantity is thus 49 units.
Equilibrium price,
P=108+6*49
P=402
This is the price that the consumers will pay, 402,
The suppliers will receive 402-8=394
Tax revenue=unit sales* tax per unit=49*8=392

Total revenue in this case would be 392*49=19208

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Total expenditure on cigarettes is 49*402=19698

a. As the price of tickets rises from $200 to $250, what is the price elasticity of demand
for (i) business travellers and (ii) holiday-makers?
Midpoint of price = 200 + 250 / 2 = $225
Midpoint of Business Travellers = 2000 + 1900 / 2 = 1950
Midpoint of Holiday-Makers = 800 + 600 / 2 = 700
Business Travellers
(100 * 225) / (50 * 1950) = 0.23
Holiday Makers
(200 * 225) / (700 * 50) = 1.285
b.Why might holiday-makers have a different elasticity than business travellers?
If the value of the elasticity is less than one, it would mean that the product is inelastic. The price elasticity of demand for the business travelers seems to be
inelastic because they have to go to their work place and on other business tour because of business requirements.
The business travels is
As the price elasticity of demand for the holiday makers is more than one, it means that the product is elastic. This is because of the fact that the holidays are a
luxury, and thus may easily be
substituted for other luxuries if the price were to increase.

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