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Elasticity and Incentives — Quiz Answers

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1
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Which is an example of a negative incentive for producers?

A
a sharp increase in production costs
B
a coupon clipped from a newspaper
C
a chance to make more money
D
a special sale at a department store
2
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Which is an example of a positive incentive for consumers?

A
a steady rise in profits over a year
B
an increase in price for a popular product
C
a coupon clipped from a newspaper
D
a sales tax imposed by a state
3

Which statement best describes incentives?

A
Incentives can be positive or negative.
B
Incentives are mostly negative.
C
Incentives are neither positive nor negative.
D
Incentives are mostly positive.
4

Tasty Treat Tea is a popular iced tea drink. When the manufacturer begins to use imported tea leaves, the price rises by 10 percent , and the quantity demanded falls by 20 percent The fact that quantity demanded changed by more than the price change suggests that

A
The demand for Tasty Treat Tea is elastic.
B
The consumer no longer shops at Tasty Treat Tea.
C
The demand for Tasty Treat Tea is inelastic.
D
The consumer no longer prefers the iced tea drink.
5

What is the difference between a price floor and a price ceiling?

A
A price floor is the maximum price allowed for a good. A price ceiling is the minimum price allowed for a good.
B
A price ceiling below the equilibrium price has no effect.
C
A price floor is the minimum price allowed for a good. A price ceiling is the maximum price allowed for a good.
D
A price floor above the equilibrium price has no effect.
6

Which statement best explains how elasticity and incentives work together?

A
An inelastic good, such as a game, is less likely to respond to incentives.
B
An inelastic good, such as a game, is more likely to respond to incentives.
C
An elastic good, such as a game, is less likely to respond to incentives.
D
An elastic good, such as a game, is more likely to respond to incentives.
7

The lowest amount a manufacturer can pay factory workers is an example of

A
a price ceiling.
B
an incentive.
C
a price floor.
D
an elastic service.
8

Price controls on goods can be set by

A
governments.
B
consumers.
C
producers.
D
economists.
9

In the market, actions known as incentives affect

A
consumers only.
B
neither consumers nor producers.
C
consumers or producers.
D
producers only.
10

A consumer might respond to a negative incentive by

A
decreasing use of the product to save money.
B
receiving a discount.
C
purchasing more of the products.
D
buying the good at a cheap price.
11

A consumer might respond to a negative incentive by

A
purchasing more of the products.
B
buying the good at a cheap price.
C
receiving a discount.
D
decreasing use of the product to save money.
12

Which statement best explains how elasticity and incentives work together?

A
An elastic good, such as a game, is less likely to respond to incentives.
B
An inelastic good, such as a game, is less likely to respond to incentives.
C
An elastic good, such as a game, is more likely to respond to incentives.
D
An inelastic good, such as a game, is more likely to respond to incentives.
13

Tasty Treat Tea is a popular iced tea drink. When the manufacturer begins to use imported tea leaves, the price rises by 10 percent , and the quantity demanded falls by 20 percent The fact that quantity demanded changed by more than the price change suggests that

A
The consumer no longer prefers the iced tea drink.
B
The demand for Tasty Treat Tea is inelastic.
C
The consumer no longer shops at Tasty Treat Tea.
D
The demand for Tasty Treat Tea is elastic.
14

Which statement best describes incentives?

A
Incentives are mostly negative.
B
Incentives can be positive or negative.
C
Incentives are mostly positive.
D
Incentives are neither positive nor negative.
15

Which statement best describes incentives?

A
Incentives are mostly negative.
B
Incentives can be positive or negative.
C
Incentives are neither positive nor negative.
D
Incentives are mostly positive.
16

What is the difference between a price floor and a price ceiling?

A
A price ceiling below the equilibrium price has no effect.
B
A price floor above the equilibrium price has no effect.
C
A price floor is the maximum price allowed for a good. A price ceiling is the minimum price allowed for a good.
D
A price floor is the minimum price allowed for a good. A price ceiling is the maximum price allowed for a good.
17

Which is an example of a negative incentive for producers?

A
a special sale at a department store
B
a coupon clipped from a newspaper
C
a sharp increase in production costs
D
a chance to make more money
18

Tasty Treat Tea is a popular iced tea drink. When the manufacturer begins to use imported tea leaves, the price rises by 10 percent , and the quantity demanded falls by 20 percent The fact that quantity demanded changed by more than the price change suggests that

A
The demand for Tasty Treat Tea is elastic.
B
The demand for Tasty Treat Tea is inelastic.
C
The consumer no longer prefers the iced tea drink.
D
The consumer no longer shops at Tasty Treat Tea.
19

What is the difference between a price floor and a price ceiling?

A
A price ceiling below the equilibrium price has no effect.
B
A price floor above the equilibrium price has no effect.
C
A price floor is the maximum price allowed for a good. A price ceiling is the minimum price allowed for a good.
D
A price floor is the minimum price allowed for a good. A price ceiling is the maximum price allowed for a good.
20

A consumer might respond to a negative incentive by

A
receiving a discount.
B
buying the good at a cheap price.
C
purchasing more of the products.
D
decreasing use of the product to save money.

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