# The price elasticity of demand when price decreases from \$9 to \$7 is A B C D -1.

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1 Varsity Economics Product Market: Elasticity 1 The price elasticity of demand is a measure of the A effect of changes in demand on the price. B relationship between price and profitability. C responsiveness of buyers of a good to changes in its price. D sensitivity of a good s price to changes in demand. 2 The basic formula for the price elasticity of demand coefficient is A absolute decline in quantity demanded/absolute increase in price. B percentage change in quantity demanded/percentage change in price. C absolute decline in price/absolute increase in quantity demanded. D percentage change in price/percentage change in quantity demanded. 3 The price elasticity of supply measures how A easily labor and capital can be substituted for one another in the production process. B responsive the quantity supplied of X is to changes in the price of X. C responsive the quantity supplied of Y is to changes in the price of X. D responsive quantity supplied is to a change in incomes. 4 The price-elasticity of demand is always negative because of A the law of demand. B percent-changes being used in the formula. C the midpoint formula. D scarcity. 5 The law of supply suggests that the price-elasticity of supply is always: A positive. B negative. C unknown. D zero. 6 The concept of price elasticity of demand measures the A slope of the demand curve. B number of buyers in a market. C extent to which the demand curve shifts as the result of a price decline. D sensitivity of consumer purchases to price changes. 7 The concept of price elasticity of supply measures the A slope of the supply curve. B number of sellers in a market. C extent to which the supply curve shifts as the result of a price decline. D sensitivity of the firms production (or sales) to price changes. 8 Suppose you are given the following data on demand for a product. The price elasticity of demand when price decreases from \$9 to \$7 is A B C D -1.

2 9 Suppose you are given the following data on demand for a product. The price elasticity of demand when price increases from \$6 to \$7 is A. -1. B C D Suppose you are given the following data on demand for a product. The price elasticity of demand when price decreases from \$10 to \$8 is A -1. B -2. C D When the price of a product is increased 10 percent, the quantity demanded decreases 15 percent. The price elasticity of demand coefficient for this product is A 1.5. B C D If the price elasticity of demand for a product is equal to 0.5, then a 10 percent decrease in price will increase quantity demanded by A 20%. B 0.5%. C 5%. D 0.05%. 13 The price of season tickets to a performing arts theater decreases by 3%. As a result, the quantity demanded increases by 6%. The price elasticity of demand for season tickets is A 0.5. B 9. C 2. D The price elasticity of demand for a popular sporting event is 2. If the price of a ticket to this event increases by 10%, the quantity of tickets demanded will decrease by A 5%. B 20%. C 10%. D 0.2%. 15 If the price elasticity of demand for a product is 2.5, then a price cut from \$2.00 to \$1.80 will A increase the quantity demanded by about 2.5%. B decrease the quantity demanded by about 2.5%. C increase the quantity demanded by about 25%. D increase the quantity demanded by about 250%.

3 16 The price elasticity of demand for widgets is Assuming no change in the demand curve for widgets, a 16% increase in sales implies a A 1% reduction in price. B 12% reduction in price. C 40% reduction in price. D 20% reduction in price. 17 Use the data in the table below to answer the following question. 18 Use the data in the table below to answer the following question. The price elasticity of demand (based on the midpoint formula) when price increases from \$18 to \$20 is A B C 1. D The price elasticity of demand (based on the midpoint formula) when price increases from \$14 to \$16 is A B C 1. D 0.33.

4 19 Use the data in the table below to answer the following question. 20 Use the data in the table below to answer the following question. The price elasticity of demand (based on the midpoint formula) when price increases from \$10 to \$12 is A B C 1. D The price elasticity of demand (based on the midpoint formula) when price increases from \$6 to \$8 is A B C. 1. D

5 21 Use the data in the table below to answer the following question. 22 Use the data in the table below to answer the following question. The price elasticity of demand (based on the midpoint formula) when price decreases from \$20 to \$18 is A B C 1. D The price elasticity of demand (based on the midpoint formula) when price decreases from \$16 to \$14 is A B C 1. D 0.33.

6 23 Use the data in the table below to answer the following question. 24 Use the data in the table below to answer the following question. The price elasticity of demand (based on the midpoint formula) when price decreases from \$12 to \$10 is A B C 1. D The price elasticity of demand (based on the midpoint formula) when price decreases from \$8 to \$6 is A B C 1. D 0.33.

7 25 Suppose you are given the following data on demand for a product. The price elasticity of demand (based on the midpoint formula) when price decreases from \$9 to \$7 is A.63. B C D Suppose you are given the following data on demand for a product. 27 When the price of candy bars decreased from \$0.55 to \$0.45, the quantity demanded changed from 19,000 per day to 21,000 per day. In this price range, the price-elasticity coefficient (based on the midpoint formula) for candy bars is A 1. B 2. C 0.2. D When the price of candy bars increased from \$0.545 to \$0.55, the quantity demanded changed from 21,000 per day to 19,000 per day. In this price range, the price-elasticity coefficient (based on the midpoint formula) for candy bars is A 1. B 2. C 0.2. D Suppose you are given the following data on demand for a product. The price elasticity of demand (based on the midpoint formula) when price increases from \$7 to \$9 is A.63. B C D The price elasticity of demand (based on the midpoint formula) when price decreases from \$10 to \$8 is A.63. B C D 2.27.

8 30 Suppose you are given the following data on demand for a product. The price elasticity of demand (based on the midpoint formula) when price increases from \$8 to \$10 is A.63. B C D Suppose that as the price of Y falls from \$2.00 to \$1.90, the quantity of Y demanded increases from 110 to 118. Then the price elasticity of demand is (based on the midpoint formula) A 4.0. B 2.1. C 1.4. D In interpreting the Ed value as either elastic or inelastic, we look at the A Ed coefficient with its negative sign. B absolute value of the E d coefficient (dropping the negative sign). C percent change in price. D percent change in quantity. 33 If the price-elasticity coefficient for a good is -.75, the demand for that good is described as A normal. B elastic. C inferior. D inelastic. 34 When the price of a product is increased 15%, the quantity demanded decreases 10%. We can therefore conclude that the demand for this product is A elastic. B inelastic. C cross-elastic. D unitary elastic. 35 If a 5% cut in the price of a product causes the quantity demanded to rise by 10%, the demand is A inelastic. B elastic. C unit elastic. D perfectly elastic. 36 Use the following graph of demand curves to answer the next question. Which demand curve is relatively most elastic between P1 and P2? A D1 B D2 C D3 D D4

9 37 Use the following graph of demand curves to answer the next question. 39 Use the data in the table below to answer the following question. For a given change in supply, which demand curve is going to yield the smallest changes in price? A D1 B D3 C D4 D D5 38 Use the data in the table below to answer the following question. Over which price range is the demand elastic? A \$4-\$6 B \$6-\$8 C \$8-\$10 D \$14-\$16 Over which price range is the demand inelastic? A \$20-\$18 B \$18-\$16 C \$14-\$12 D \$8-\$6

10 40 Use the data in the table below to answer the following question. 43 Along a linear downward-sloping demand curve, the price elasticity of demand will be A greater than one across each price range. B less than one across each price range. C equal to zero across each price range. D different across each price range. 44 Consider the parallel demand curves in the following graph to answer the question. Over which price range is the demand unit-elastic? A \$18-\$16 B \$16-\$14 C \$14-\$12 D \$12-\$10 41 If the demand for product X is inelastic, a 4% increase in the price of X will: A decrease the quantity of X demanded by more than 4%. B decrease the quantity of X demanded by less than 4%. C increase the quantity of X demanded by more than 4%. D increase the quantity of X demanded by less than 4%. 42 A straight-line downward-sloping demand curve has a price elasticity of demand that A decreases as price decreases. B increases as price decreases. C is zero at all prices. D is unitary at all prices. Which curve is relatively more elastic at P 1? A AA B BB C It cannot be determined. D Both have the same slope; therefore both have the same elasticity. 45 Suppose Aiyanna's Pizzeria currently faces a linear demand curve and is charging a very high price per pizza and doing very little business. Aiyanna now decides to lower pizza prices by 5% per week for an indefinite period of time. We can expect that each successive week A demand will become more price elastic. B price elasticity of demand will not change as price is lowered. C demand will become less price elastic. D the elasticity of supply will increase. 46 The price elasticity of demand of a straight-line demand curve is A elastic in high-price ranges and inelastic in low-price ranges. B elastic but does not change at various points on the curve. C inelastic but does not change at various points on the curve. D 1 at all points on the curve.

11 47 For a linear demand curve A elasticity is constant along the curve. B elasticity is unity at every point on the curve. C demand is elastic at low prices. D demand is elastic at high prices. 48 Use the following diagram of two product demand curves to answer the question. 50 Answer the next question on the basis of the following demand schedule. On the basis of this diagram, we can say that A over the range P 1 P 2, price elasticity of demand is greater for D 1 than for D2. B over the range P 1 P 2, price elasticity of demand is greater for D 2 than for D1. C over range P 1 P 2, price elasticity is the same for the two demand curves. D not enough information is given to compare price elasticities. 49 Use the following graph to answer the question. If this demand schedule were graphed, we would find that A its slope diminishes as we move southeast down the curve. B its slope diminishes as we move northwest up the curve. C its slope is constant throughout. D the data are inconsistent with the law of demand. 51 Answer the next question on the basis of the following demand schedule. Between prices of \$5.70 and \$6.30 A D1 is more elastic than D2. B D2 is noncomparable to D1. C D1 and D2 have identical elasticities. D D2 is more elastic than D1. The price elasticity of demand is relatively elastic (based on the midpoint formula). A in the \$6-\$4 price range. B over the entire \$6-\$1 price range. C in the \$3-\$1 price range. D in the \$6-\$5 price range only.

12 52 Answer the next question on the basis of the following demand schedule. 54 Answer the next question on the basis of the following demand schedule. The price elasticity of demand is relatively inelastic (based on the midpoint formula) A in the \$6-\$4 price range. B over the entire \$6-\$1 price range. C in the \$3-\$1 price range. D in the \$6-\$5 price range only. 53 Answer the next question on the basis of the following demand schedule. Which of the following is correct? A Although the slope of the demand curve is constant, price elasticity declines as we move from high to low price ranges. B Although the slope of the demand curve is constant, price elasticity increases as we move from high to low price ranges. C Although the demand curve is convex to the origin, price elasticity of demand is constant throughout. D A steep slope means demand is inelastic; a flat slope means demand is elastic. 55 In which price range of the accompanying demand schedule is demand elastic (based on the midpoint formula)? The price elasticity of demand is unity (based on the midpoint formula) A throughout the entire price range because the slope of the demand curve is constant. B in the \$4-\$3 price range only. C over the entire \$3-\$1 price range. D over the entire \$6-\$4 price range. A \$4-\$3 B \$3-\$2 C \$2-\$1 D below \$1

13 56 Which of the following statements is inconsistent with an elastic demand curve? A The price-elasticity coefficient greater than 1. B Total revenues fall when prices rise. C Buyers are relatively sensitive to price changes. D The relative change in quantity exceeds the relative change in price. 57 The total revenue received by sellers of a good is computed by A multiplying the price times the quantity sold. B adding the price and the quantity sold. C multiplying the percentage change in price times the percentage change in quantity. D dividing the percentage change in quantity by the percentage change in price. 58 Total revenue falls as the price of a good is raised, if the demand for the good is A elastic. B inelastic. C unitary elastic. D perfectly elastic. 59 Use the following graph of total revenues to answer the question below. 60 Use the following graph of total revenues to answer the question below. If the quantity of product X demanded falls from 14,000 to 10,000 units, then it suggests that the price of X was A reduced and the demand is elastic. B increased and the demand is elastic. C reduced and the demand is inelastic. D increased and the demand is inelastic. 61 Use the following graph of total revenues to answer the question below. fan increase in the quantity of product X demanded from 14,000 to 16,000 units implies that the price of product X was A reduced and the demand is elastic. B increased and the demand is elastic. C reduced and the demand is inelastic. D increased and the demand is inelastic. Demand is price-elastic between points A A and B. B D and E. C F and G. D G and H.

14 62 Use the following graph of total revenues to answer the question below. 65 Use the following graph to answer the question below.: When the seller is earning maximum revenues from selling Product X, the demand is A elastic. B inelastic. C unit-elastic. D perfectly inelastic. 63 Demand is said to be inelastic when A an increase in price results in a reduction in total revenue. B a reduction in price results in an increase in total revenue. C a reduction in price results in a decrease in total revenue. D the elasticity coefficient exceeds In which instances will total revenues decline? A price rises and E d equals -.41 B price rises and demand is of unit elasticity C price falls and demand is elastic D price rises and E d equals If the price is P 3, then the total revenue is represented by area A B + C + D. B E + F + G. C B + C + D + E + F + G. D A + B + C + D + E + F + G. 66 Use the following graph to answer the question below. If the price decreases from P 3 to P 2, then the total revenue will lose area A B + E, but it will gain area H + I. B H + I, but it will gain area A + B + C. C E + F + G but it will gain area H + I + J. D A + B + C + D, but it will gain area E + F + G.

16 75 Which is not characteristic of a product with relatively inelastic demand? A The good is regarded by consumers as a necessity. B There are a large number of good substitutes for the good. C Buyers spend a small percentage of their total income on the product. D Consumers have had only a short time period to adjust to changes in price. 76 Which of the following factors will make the demand for a product relatively elastic? A There are few substitutes. B The time interval considered is long. C The good is considered a necessity. D Purchases of the good require a small portion of consumers' budgets. 77 The price elasticity of demand increases with the length of the period considered because A consumers' incomes will increase over time. B the demand curve will shift outward as time passes. C all prices will increase over time. D consumers will be better able to find substitutes. 78 If in the short run the demand for mass transit is inelastic and in the long run the demand is elastic, then a price A increase will decrease total revenue in the short run but increase total revenue in the long run. B increase will increase total revenue in the short run but decrease total revenue in the long run. C decrease will increase total revenue in the short run but decrease total revenue in the long run. D decrease will decrease total revenue in the short run and decrease total revenue in the long run. 79 Which of the following generalizations is not correct? A The larger an item is in one's budget, the greater the price elasticity of demand. B The price elasticity of demand is greater for necessities than it is for luxuries. C The larger the number of close substitutes available, the greater will be the price elasticity of demand for a particular product. D The price elasticity of demand is greater the longer the time period under consideration. 80 Price elasticity of demand is generally A greater in the long run than in the short run. B greater in the short run than in the long run. C the same in both the short run and the long run. D greater for "necessities" than it is for "luxuries." 81 The demand for a luxury good whose purchase would exhaust a big portion of one's income is A perfectly price inelastic. B perfectly price elastic. C relatively price inelastic. D relatively price elastic. 82 The demand for a necessity whose cost is a small portion of one's total income is A perfectly price inelastic. B perfectly price elastic. C relatively price inelastic. D relatively price elastic. 83 The formula for cross elasticity of demand is percentage change in A quantity demanded of X/percentage change in price of X. B quantity demanded of X/percentage change in income. C quantity demanded of X/percentage change in price of Y. D price of X/percentage change in quantity demanded of Y. 84 We would expect the cross elasticity of demand between Pepsi and Coke to be A positive, indicating secondary goods. B positive, indicating general goods. C positive, indicating substitute goods. D negative, indicating substitute goods. 85 Cross elasticity of demand measures how sensitive purchases of a specific product are to changes in A the price of some other product. B the price of that same product. C income. D the general price level.

17 86 If a 10% increase in the price of one good, A, results in an increase of 5% in the quantity demanded of another good, B, then it can be concluded that the two goods, A and B are A complementary goods. B substitute goods. C independent goods. D secondary goods. 87 The cross elasticity of demand between Quaker State motor oil and Texaco motor oil is likely to be A zero. B a positive number. C a small negative number. D a large negative number. 88 The cross elasticity of demand for product X with respect to the price of product Y is 2. It can be inferred that X and Y are A substitute products. B secondary products. C better products. D unrelated products. 89 A 3% increase in the price of tea causes a 6% increase in the demand for coffee. The cross elasticity of demand for coffee with respect to the price of tea is A B C D Use the figure below to answer the following question. The case of substitute goods is represented by figure A A. B B. C C. D D. 91 Cross elasticity of demand is A negative for complementary goods. B negative for substitute goods. C unitary for secondary goods. D positive for general goods. 92 We would expect the cross elasticity of demand between dress shirts and ties to be A positive, indicating secondary goods. B positive, indicating complementary goods. C negative, indicating substitute goods. D negative, indicating complementary goods. 93 If a 10% increase in the price of one good results in no change in the quantity demanded of another good, then it can be concluded that the two goods are A complementary goods. B substitute goods. C independent goods. D normal goods.

18 94 The cross elasticity of demand between Quaker State motor oil and Texaco motor oil is likely to be A zero. B a positive number. C a small negative number. D a large negative number. 95 The cross elasticity of demand for product X with respect to the price of product Y is It can be inferred that X and Y are A substitute products. B complementary products. C luxury products. D unrelated products. 96 Compared to coffee, we would expect the cross elasticity of demand for A tea to be negative, but positive for cream. B tea to be positive, but negative for cream. C both tea and cream to be negative. D both tea and cream to be positive. 97 Use the figure below to answer the following question. 98 Most goods can be classified as normal goods rather than inferior goods. The definition of a normal good suggests that the A income elasticity of demand for the good is negative. B price elasticity of demand for the good is negative. C income elasticity for the good is greater than 0. D cross elasticity of demand for the good is positive. 99 A negative income elasticity of demand coefficient indicates that the product A is an inferior good. B follows the law of demand. C is a complementary good. D is a substitute good. 100 The income elasticity of demand for food is roughly 1. A consumer's monthly income is \$2,000, of which 20% is spent on food. If the income of this consumer doubles, the amount she ll spend on food will be A \$400 per month. B \$500 per month. C \$800 per month. D \$1,000 per month. 101 The relationship between a consumer's monthly income and monthly consumption of four products, A-D, is shown below. The case of complementary goods is represented by figure A A. B B. C C. D D. Which product listed is an example of an inferior good? A A B B C C D D

19 102 For which product is the income elasticity of demand most likely to be negative? A computer software B used clothing C apps for ipads D bread 103 Answer the next question based on information in the following table. Which product would be an inferior good? A product W B product X C product Y D product Z 104 Answer the next question based on information in the following table. 105 The income elasticity of demand for jewelry is +2. Other things equal, a 10% increase in consumer income will A decrease the quantity of jewelry purchased by 20%. B increase the quantity of jewelry purchased by 5%. C decrease the quantity of jewelry purchased by 5%. D increase the quantity of jewelry purchased by 20%. 106 Assume that a 3% increase in income across the economy produces a 1% decline in the quantity demanded of good X. The coefficient of income elasticity of demand for good X is A negative, and therefore X is an inferior good. B negative, and therefore X is a normal good. C positive, and therefore X is an inferior good. D positive, and therefore X is a normal good. 107 The elasticity of supply for a product will be 2 if A a 1% decrease in the price causes a 0.2% decrease in quantity supplied. B a 2% decrease in price causes a 1% decrease in quantity supplied. C a 1% decrease in price causes a 2% decrease in quantity supplied. D a 2% decrease in price causes a 2% decrease in quantity supplied. 108 Suppose the price elasticity of supply for crude oil is 2.5. How much would price have to rise to increase production by 20%? A 8% B 12.5% C 20% D 45% Which product is most responsive to a change in income? A product W B product X C product Y D product Z

20 109 Use the following graph to answer the question below. 111 The following data relate to the supply schedule of a product. What is the price elasticity of supply (simple formula) when moving from point A to point B? A 1 B 3 C 2 D 1/3 110 The following data relate to the supply schedule of a product. The price elasticity of supply (based on the simple formula) when price decreases from \$10 to \$5 is A 1. B 0.6. C 0.5. D The following data relate to the supply schedule of a product. The price elasticity of supply (based on the simple formula) when price increases from \$15 to \$20 is A 1. B 0.6. C 0.5. D 0.2. The price elasticity of supply (based on the simple formula) when price decreases from \$20 to \$15 is A 0.2. B C D 1.

21 113 The price elasticity of supply measures how A easily labor and capital can be substituted for one another in the production process. B responsive the quantity supplied of X is to changes in the price of X. C responsive the quantity supplied of Y is to changes in the price of X. D responsive quantity supplied is to a change in incomes. 114 Use the figure below to answer the following question: 115 The following data relate to the supply schedule of a product. In the graph above, what is the price elasticity of supply (using the midpoint formula) between points A and B above? A 1 B 3 C 2 D 1/3 The price elasticity of supply (based on the midpoint formula) when price increases from \$5 to \$10 is A 1. B C D The following data relate to the supply schedule of a product. The price elasticity of supply (based on the midpoint formula) when price increases from \$15 to \$20 is A 1. B C D 0.51.

22 117 The following data relate to the supply schedule of a product. 120 Use the figure below to answer the following question: The price elasticity of supply (based on the midpoint formula) when price decreases from \$25 to \$20 is A 1. B C D At a price of \$4 per unit, Gadgets Inc. is willing to supply 20,000 gadgets, while United Gadgets is willing to supply 10,000 gadgets. If the price were to rise to \$8 per unit, their respective quantities supplied would rise to 45,000 and 25,000. If these are the only two firms supplying gadgets, what is the elasticity of supply in the market for gadgets (use the midpoint formula)? A 1.2 B 1.0 C.833 D A price increase from \$43 to \$49 results in an increase in quantity supplied from 220 units to 240 units. The price elasticity of supply in this price range is (use the midpoint formula): A.3 B.67 C 1.50 D 3.33 Over the \$10-\$8 price range, the elasticity coefficient of supply is: A 1 B zero. C less than 1. D greater than Use the table below to answer the following question: Over the \$6-\$4 price range, supply is A zero. B elastic. C nonresponsive. D inelastic.

23 122 The supply of product X is elastic if the price of X rises by A 5% and quantity supplied rises by 7%. B 8% and quantity supplied rises by 8%. C 10% and quantity supplied remains the same. D 7 % and quantity supplied rises by 5%. 123 The supply of product X is inelastic (but not perfectly inelastic) if the price of X rises by A 5% and quantity supplied rises by 7%. B 8% and quantity supplied rises by 8%. C 10% and quantity supplied remains the same. D 7% and quantity supplied rises by 5%. 124 The elasticity of supply of product X is unitary if the price of X rises by A 5% and quantity supplied rises by 7%. B 8% and quantity supplied rises by 8%. C 10% and quantity supplied stays the same. D 7% and quantity supplied rises by 5%. 125 Suppose that the price of product X rises by 20% and the quantity supplied of X increases by 15%. The coefficient of price elasticity of supply for good X is A negative and therefore X is an inferior good. B positive and therefore X is a normal good. C less than 1 and therefore supply is inelastic. D more than 1 and therefore supply is elastic. 126 Use the figure below to answer the following question. Assume that price increases from \$2 to \$10. The coefficient of the price elasticity of supply (midpoint formula) relating to this price change is about A 5 and supply is elastic. B 1 and supply is unit elastic. C.25 and supply is inelastic. D 2.5 and supply is elastic. 127 Use the figure below to answer the following question: Assume that price decreases from \$10 to \$2. The coefficient of the price elasticity of supply (midpoint formula) relating to this price change is about A 4 and supply is elastic. B 1 and supply is unit elastic. C.5 and supply is inelastic. D.25 and supply is inelastic.

24 128 The following data relate to the supply schedule of a product. 130 Use the table below to answer the following question. Over which price range is the elasticity of supply greater than 1? A \$10 to \$15 B \$15 to \$20 C \$20 to \$25 D \$25 to \$ Use the diagram of two product supply curves to answer the following question. Over the \$8-\$6 price range, supply is A inelastic. B elastic. C nonresponsive. D zero. 131 Economists distinguish among the immediate market period, the short run, and the long run by noting that A supply is most elastic in the short run and least elastic in the immediate market period. B demand is most elastic in the long run and least elastic in the immediate market period. C supply is most elastic in the long run and least elastic in the immediate market period. D supply is most elastic in the short run and least elastic in the long run. The diagram indicates that A over range Q1 Q2 price elasticity of supply is greater for S1 than for S2. B over range Q1 Q2 price elasticity of supply is greater for S2 than for S1. C over range Q 1 Q 2 price elasticity of supply is the same for the two curves. D not enough information is given to compare price elasticities.

25 132 Use the figure below to answer the following question. 133 Use the figure below to answer the following question. Which graph shows the immediate market period for supply? A graph A B graph B C graph C D graph D For which graph is the supply perfectly inelastic? A graph A B graph B C graph C D graph D 134 The supply of cars will be more elastic the A greater the quantity demanded. B longer the time interval considered. C greater the decline in input prices. D less able producers are to make other goods. 135 To economists, the main differences between "the short run" and "the long run" are that A the law of diminishing returns applies in the long run, but not in the short run. B in the short run all resources are fixed, while in the long run all resources are variable. C fixed inputs are more important to decision making in the long run than they are in the short run. D in the long run all resources are variable, while in the short run at least one resource is fixed.

26 136 The main reason for the high price of antiques is that A supply is relatively elastic and demand increases over time. B supply is relatively inelastic and demand increases over time. C demand is relatively elastic and supply increases over time. D demand is relatively inelastic and supply increases over time. 137 The supply of product X is perfectly inelastic if the price of X rises by A 5% and quantity supplied rises by 7%. B 8% and quantity supplied rises by 8%. C 10% and quantity supplied stays the same. D 7% and quantity supplied rises by 5%. 138 It takes a considerable amount of time to increase the production of pork. This implies that A a change in the demand for pork will not affect its price in the short run. B the short-run supply curve for pork is less elastic than the long-run supply curve for pork. C an increase in the demand for pork will elicit a larger supply response in the short run than in the long run. D the long-run supply curve for pork is less elastic than the short-run supply curve for pork. 139 Use the figure below to answer the following question. 140 Use the figure below to answer the following question. The diagram concerns supply adjustments to an increase in demand (D 1 to D 2 ) in the immediate market period, the short run, and the long run. In the immediate market period, the increase in demand will A have no effect on either equilibrium price or quantity. B increase equilibrium price but not equilibrium quantity. C increase equilibrium quantity but not equilibrium price. D increase both equilibrium price and quantity. 141 Use the figure below to answer the following question. The diagram concerns supply adjustments to an increase in demand (D1 to D2 ) in the immediate market period, the short run, and the long run. Supply curves S1, S2, and S3 apply to the A immediate market period, long run, and short run respectively. B immediate market period, short run, and long run respectively. C long run, short run, and immediate market period respectively. D short run, long run, and immediate market period respectively. The diagram concerns supply adjustments to an increase in demand (D1 to D2 ) in the immediate market period, the short run, and the long run. In the long run, the increase in demand will A have no effect on either equilibrium price or quantity. B increase equilibrium price but not equilibrium quantity. C increase equilibrium quantity but not equilibrium price. D increase both equilibrium price and quantity.

27 142 Use the figure below to answer the following question. The diagram concerns supply adjustments to an increase in demand (D1 to D2) in the immediate market period, the short run, and the long run. On the basis of this illustration, we can conclude that A short-run adjustments are more economically efficient than are long-run adjustments. B the amount of time producers have to adjust to a change in demand is not a determinant of supply elasticity. C supply is more elastic the greater the amount of time producers have to adjust to a change in demand. D supply is less elastic the greater the amount of time producers have to adjust to a change in demand.