24 Elizabeth Savoca estimated that for every 1 percent increase in tuition

# 24 elizabeth savoca estimated that for every 1

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24. Elizabeth Savoca estimated that for every 1 percent increase in tuition costs at a college, 2.4 percent fewer students applied to that college. This indicates that the elasticity of applying to college is: a. Elastic 25. If the price elasticity of demand for a good is inelastic, a price change causes: a. A less than proportionate change in quantity demanded 26. Refer to the following graph. Elasticity is smallest at which point? a. D 27. If the quantity of Big Macs demanded falls from 2.0 million to 1.6 million as the price of Whoppers falls from $1.40 to$.80, the cross-price elasticity of demand for Big Macs is: a. 0.4 28. Refer to the graph shown. Area F is:

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a. smaller than areas B and C, because demand is inelastic between $10 and$30. 29. Refer to the graph shown. Which supply curve is perfectly elastic? a. A 30. It is estimated that a 5 percent decline in income will reduce health care purchases by 2.5 percent and reduce dental service purchases by 8 percent. From this information, one can conclude that: a. health care is a necessity and dental services are a luxury. Chapter 7 1. There would be no deadweight loss if: a. Demand was perfectly inelastic 2. Refer to the graph shown. With an effective price floor at P f , the effect is an implicit tax on: a. consumers shown by area B and a subsidy to suppliers of that area. 3. Refer to the graph shown. When the market is in equilibrium, total surplus is area:
a. A plus area F 4. Refer to the graph shown. When the market is in equilibrium, producer surplus is equal to: a. 750 5. A general rule of political economy in a democracy is that when small groups are helped by a government action and large groups are hurt by that action by an equal and offsetting amount, policies tend to reflect: a. The small group’s interest 6. Refer to the graph shown. An effective price floor at $8 causes consumer surplus to: a. Fall from 62.50 to 10 7. Suppose elasticity of demand is 0.2, elasticity of supply is 0.7, and a 10 percent excise tax is levied on producers. Which of the following changes will reduce the share of the tax paid by consumers? a. Elasticity of supply falls to 0.3 8. Refer to the graph shown. Which statement best characterizes the difference between the effect of a price ceiling in the short run and the long run? Subscribe to view the full document. a. A price ceiling of P 2 will create a shortage of (Q 3 - Q 1 ) in the short run, but a greater shortage of (Q 3 - Q 0 ) in the long run. 9. A local government is considering a 10 percent tax on items A, B, and C. They want to tax only those goods for which the burden of the tax is lowest on suppliers. They know that the elasticity of supply of all the suppliers in question is about equal and have observed that when the price of A , B, and C rose 10 percent, total sales receipts for A and B rose 2 percent but declined 2 percent for C. From this information, they should: a. Tax A and B but not C 10. Refer to the graph shown. When market supply shifts from S 0 to S 1 , the revenue gain to suppliers resulting from increased quantity demanded is shown by area: a. C 11. Refer to the graph shown. Assume that the market is initially in equilibrium at a price of$10

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