Homework Answers
Solution is Option A. The supply will become more elastic because consumers may have more choices over long time horizons.
Since high prices over long horizon keeps consumers away and switch to alternative causing the supply lf corn to reduce as demand decreases simultaneously and hence supply is elastic due to price change.
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7. Suppose an increase in the world price of corn is sustained throughout a long time...
7. Suppose an increase in the world price of corn is sustained throughout a long time...
7. Suppose an increase in the world price of corn is sustained throughout a long time period. The supply of corn over time will likely, a. become more elastic because consumers have more choices over longer time horizons. b. become more elastic because it takes corn a relatively long amount of time to mature from planting to harvest. c. become less elastic (more inelastic) because consumers have fewer choices over longer time horizons. d. become less elastic (more inelastic) because...
An increase in the price of a small town newspaper from $.70 to $.90 results in...
An increase in the price of a small town newspaper from $.70 to $.90 results in a decrease in sales from 2,880 to 1,920 per day. The price elasticity of demand coefficient (using the midpoint formula is for this newspaper. a. 0.25 b. 0.625 c. 1.4 d. 1.6 At a typical store, there are dozens of choices on the breakfast cereal aisle. Therefore, the demand for Cheerios is expected to be: price-elastic since consumers can switch to corn flakes or...
5. Determinants of the price elasticity of demand Consider some determinants of the price elasticity of...
5. Determinants of the price elasticity of demand
Consider some determinants of the price elasticity of
demand:
• The availability of close substitutes
• Whether the good is a necessity or a luxury
• How broadly you define the market
• The time horizon being considered
A good with many close substitutes is likely to have relatively
__(Elastic, Inelastic)___ demand since consumers can easily choose
to purchase one of the close substitutes if the price of the good
rises.
A...
Question text Suppose that there are three types of markets with different degrees of price elasticity....
Question text Suppose that there are three types of markets with different degrees of price elasticity. In Market 1, the demand curve is perfectly inelastic and the supply curve is relatively steep. In Market 2, the supply curve is relatively flat and the demand curve is relatively steep. In Market 3, the supply curve is relatively steep and the demand curve is relatively flat. Which of the following statements is (are) correct? (x) All of the burden of the tax...
Over the long run, worldwide supplies of agriculture products have increased dramatically, but at the same...
Over the long run, worldwide supplies of agriculture products have increased dramatically, but at the same time, farmers' revenues have also fallen sharply. What is the reason for this? O a. Total revenue from farming decreased as output increased because demand for most farm products is inelastic. O b. The demand for farm products has declined over the past few decades. O c. Farm price supports have robbed farmers of their income. O d. Supply has increased but become more...
Consider some determinants of the price elasticity of demand: • Availability of close substitutes • Whether...
Consider some determinants of the price elasticity of demand: • Availability of close substitutes • Whether the good is a necessity or a luxury • Whether the good is broadly defined • The proportion of a consumer's budget spent on the good • Time people have to adapt to new price changes A good without any close substitutes is likely to have relatively(elastic or inelastic)demand, because consumers cannot easily switch to a substitute good if the price of the good...
9.When price increase from $43 to $49, quantity supplied increases from 220 units to 240 units....
9.When price increase from $43 to $49, quantity supplied increases from 220 units to 240 units. The price elasticity of supply in this price range is (use the Midpoint Formula): Multiple Choice a.0.3 b.0.67 c.1.5 d.3.33 10. When any change in price results in an infinite change in quantity demanded: Multiple Choice a.price elasticity of supply is zero. b.demand is perfectly elastic. c.demand is perfectly inelastic. d.price elasticity of supply is infinite. 12. Over a longer period of time: Multiple...
Marcus says that he would smoke one pack of cigarettes each day regardless of the price. If he is telling the truth, Marcus’s
QUESTION 25Marcus says that he would smoke one pack of cigarettes each day regardless of the price. If he is telling the truth, Marcus’sa.demand for cigarettes is perfectly inelastic.b.price elasticity of demand for cigarettes is infinite.c.income elasticity of demand for cigarettes is 0.d.More than one of the above is correct.QUESTION 26The demand for a good becomes more inelastica.as more close substitutes for it become available.b.the longer the time horizon.c.as the market is defined more broadly.d.as it is increasingly viewed as...
es in demand will increase shart-run profits but not necessarily long run 7. Price is not...
es in demand will increase shart-run profits but not necessarily long run 7. Price is not the only variable of competition Managers with differentia ed products and budgets for promotion seek to control in a limited way the position of demand curves for their products and services. Some firms spend large amounts on developing and merchandising new products. Others may respond to a price cut of a competitor by increas ing their TV ads. In numerous ways the marketing of...
(1) If the world price is above the domestic equilibrium price, the domestic country is likely...
(1)
If the world price is above the domestic equilibrium price, the
domestic country is likely to ____________________ the good.
(2)
The difference between what an economy sells to and buys from
foreigners is _________________.
(3)
The idea that exchange rates and prices adjust to equalize the
cost of living across international boundaries is called
__________________________.
(4)
In the graph below, when the world price is $3, how many units
are...
7. Suppose an increase in the world price of corn is sustained throughout a long time period. The supply of corn over time will likely, a. become more elastic because consumers have more choices over longer time horizons. b. become more elastic because it takes corn a relatively long amount of time to mature from planting to harvest. c. become less elastic (more inelastic) because consumers have fewer choices over longer time horizons. d. become less elastic (more inelastic) because...
An increase in the price of a small town newspaper from $.70 to $.90 results in a decrease in sales from 2,880 to 1,920 per day. The price elasticity of demand coefficient (using the midpoint formula is for this newspaper. a. 0.25 b. 0.625 c. 1.4 d. 1.6 At a typical store, there are dozens of choices on the breakfast cereal aisle. Therefore, the demand for Cheerios is expected to be: price-elastic since consumers can switch to corn flakes or...
5. Determinants of the price elasticity of demand
Consider some determinants of the price elasticity of
demand:
• The availability of close substitutes
• Whether the good is a necessity or a luxury
• How broadly you define the market
• The time horizon being considered
A good with many close substitutes is likely to have relatively
__(Elastic, Inelastic)___ demand since consumers can easily choose
to purchase one of the close substitutes if the price of the good
rises.
A...
Over the long run, worldwide supplies of agriculture products have increased dramatically, but at the same time, farmers' revenues have also fallen sharply. What is the reason for this? O a. Total revenue from farming decreased as output increased because demand for most farm products is inelastic. O b. The demand for farm products has declined over the past few decades. O c. Farm price supports have robbed farmers of their income. O d. Supply has increased but become more...
es in demand will increase shart-run profits but not necessarily long run 7. Price is not the only variable of competition Managers with differentia ed products and budgets for promotion seek to control in a limited way the position of demand curves for their products and services. Some firms spend large amounts on developing and merchandising new products. Others may respond to a price cut of a competitor by increas ing their TV ads. In numerous ways the marketing of...
(1)
If the world price is above the domestic equilibrium price, the
domestic country is likely to ____________________ the good.
(2)
The difference between what an economy sells to and buys from
foreigners is _________________.
(3)
The idea that exchange rates and prices adjust to equalize the
cost of living across international boundaries is called
__________________________.
(4)
In the graph below, when the world price is $3, how many units
are...
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